Social Aspects of 


> 


Farmers! Co-operative 
Marketing 


Benson YY.” Landis 





a, 


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BULLETIN No. 4 


SOCIAL ASPECT 
of | 
FARMERS’ CO-OPERATIVE 
MARKETING 


By | 
BENSON Y. LANDIS 


Ws 
Cad 


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THE UNIVERSITY of CHICAGO PRESS 
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DEPARTMENT OF RESEARCH AND EDUCATION 


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Coprriaut, 1925, By 
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Published April 1925 


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CONTENTS 


FOREWORD 
CHAPTER 


I. Tat DEVELOPMENT OF CO-OPERATIVE MARKETING IN 
THE UNITED STATES 


II. ‘‘BUSINESS-ONLY’’ CO-OPERATIVES 


III. Soctan AND EpucaTIONAL ACTIVITIES oF Loca As- 
SOCIATIONS 


TV. SocitaAL SIGNIFICANCE OF METHODS OF CENTRALIZATION 


V. SocIAL SIGNIFICANCE OF CO-OPERATIVE MARKETING 
CONTRACTS 


VI. SoctlaAL AND EDUCATIONAL are OF Been, eee a 
TIONS . 


VII. Revations oF Socrat, EpucATIONAL, AND RELIGIOUS 
ORGANIZATIONS TO CO-OPERATIVES 


VIII. ConcLusions 


APPENDIX: STUDIES OF THE SoctAL ASPECTS OF EUROPEAN 
AGRICULTURAL CO-OPERATIVES 


The Gill Report of 1912 

Polish Social and Economic Co-operatives 

“Non-Trade” Activities of the Russian Organizations. ; 

Sepa “Tual-Purpose” Co-operatives on Education in Fin- 
an PEN Ae get a 

The Irish Movement 

Indirect Social Effects of Co-operatives i in Denmark 


iil 


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FOREWORD 


Farmers’ marketing associations are the most spectacular 
co-operative enterprises in the United States. During the past 
five or six years many large and powerful organizations have 
been formed in all parts of the country. About one-seventh of 
the farmers of the nation have joined organizations of one 
type alone. 

Some rural leaders tell of great social development made 
possible because of successful co-operative marketing in cer- 
tain sections, and predict that the development of social, ed- 
ucational, and religious organizations will be considerably 
facilitated if co-operative marketing can be successfully car- 
ried on throughout the country. 

Others are eager to have more definite information about 
the interests and objectives of the co-operative organizations 
and their leaders and to get specific instances of social results 
of co-operative marketing. They are asking, for instance: Is 
there co-operation between these marketing agencies and the 
social, educational, and religious organizations? Are these 
organized farmers spending funds for social development? Do 
the organizations in the United States have social objectives 
similar to those of some European co-operatives? 

It has been apparent that, in certain instances, the social 
and religious values of co-operation are very great, and this 
study has therefore been made in order to give information on 
the non-commercial policies and activities of the main types 
of co-operative marketing associations. Specifically, the pur- 
pose is to discuss: (1) evidences, if they exist, of social (non- 
commercial) effects or contributions for which typical farm- 
ers’ co-operative marketing associations are responsible; (2) 
what factors and conditions in typical farmers’ co-operative 
marketing organizations or in local communities hinder or 
prevent such social results; (3) the relations between social, 
educational, and religious organizations and these co-opera- 
tive economic organizations among farmers. 


iV; 


vl FOREWORD 
The terms “‘social effects,” “social contributions,” or ‘‘so- 
cial activities’ as used in this study refer to non-commercial 
activities such as recreation, public-health work, social meet- 
ings, except that in some investigations described in chapters 
iii and v they also include education in co-operative principles 
and methods. 

The study was carried on by the Rural Committee of 
the Department of Research and Education, consisting of 
Edmund de 8. Brunner, chairman; Benson Y. Landis, secre- 
tary; Edwin L. Earp; Arthur E. Holt; E. C. Lindeman; H. N. 
Morse; Newell L. Sims; Paul L. Vogt. The secretary has had 
responsibility for gathering and interpreting data and writing 
the manuscript. Valuable assistance was given by the other 
members of the Committee by planning the general scope of 
study, criticizing schedules and questionnaires, and suggest- 
ing changes in the manuscript. 

Special attention is called to the summaries of studies of 
the social aspects of agricultural co-operatives in Europe, 
which appear in the Appendix. 

Acknowledgments are hereby made to Professor Ivan 
Wright, of the University of Illinois, and Professor W. L. 
Bailey, of Northwestern University, for assistance in making 
intensive studies of local co-operatives and their relations with 
their communities, and to large numbers of managers of co- 
operatives for data about their associations; and to Professor 
Dwight L. Sanderson, of the New York College of Agriculture, 
for criticisms on the manuscript. 

A final statement should be made that the members of the 
Committee responsible for this study believe that farmers 
must set up co-operative economic processes, especially co- 
operative marketing, if they are to secure justice and escape 
exploitation in the distribution of their products; they have 
endeavored to make as impartial as possible a study of the 
questions selected for investigation; they feel, however, that 
this investigation has been largely of a preliminary nature, 
and that its chief contribution is to arouse discussion and to 
stimulate further and more intensive investigation. 


CHAPTER I 


THE DEVELOPMENT OF CO-OPERATIVE MAR- 
KETING IN THE UNITED STATES 


The farmers’ venture into commerce by means of co- 
operative marketing associations may be understood as one 
phase of the “agricultural revolution” which has brought 
about marked advance in methods of production and increas- 
ing use of machinery, significant changes in standards of liv- 
ing, population changes which have shaken rural community 
life in most parts of the country, the establishment of rural- 
credit agencies by the federal government, etc. Co-operative 
marketing, however, is one of the most significant of the 
movements which make up the “agricultural revolution.” 
The fundamental changes in the distribution system brought 
about by the co-operative associations have been vividly sum- 
marized by Clarence Poe, editor of the Progressive Farmer, as 
follows: 


Under the present (marketing) system, we 
(1) ignorantly, 
(2) individually, 
(3) helplessly, 
(4) dump farm products 
(5) in small quantities 
(6) without proper grading, 
(7) without scientific finance, 
(8) selling through untrained producers. 


Under co-operative marketing, we 
(1) intelligently, 
(2) collectively, 
(3) powerfully, 
(4) merchandise farm products 
(5) in large quantities 
(6) with proper grading, 
(7) with modern systematic financing, 
(8) selling through the most expert selling agencies.! 


1 Progressive Farmer, June 7, 1924. 
1 


2 FARMERS’ CO-OPERATIVE MARKETING 


The following statement, which appeared in large city 
dailies, is illuminating evidence of the significance of the 
movement we are considering: 

LovuIsvILLE, Ky., Jan. 18, 1924.—The largest single sale of leaf 
tobacco on record has just been announced by the Burley Tobacco 


Growers’ Cooperative Association, which sold to Liggett & Myers 
Tobacco Company sixty million pounds of Burley Leaf. 


The one hundred thousand tobacco-farmer members of this 
Association, instead of selling their own ungraded products in 
small quantities, could sit in their homes and read in the press 
of the sale of an enormous quantity of their products by their 
own marketing agency. Two presidents of the United States 
have indorsed farmers’ co-operative marketing. Hundreds of 
millions of dollars have been loaned by the national govern- 
ment to large farmers’ co-operative organizations through 
the War Finance Corporation and the Federal Intermediate 
Credit banks. The movement has been indorsed by conser- 
vative bankers and business men such as Otto H. Kahn, 
Bernard M. Baruch, Eugene Meyer, Benjamin F. Yoakum. 
The county agricultural agents of the United States Depart- 
ment of Agriculture have assisted in the formation of numer- 
ous associations. All of these things are new in American ex- 
perience. 

These co-operative marketing associations are a wide- 
spread protest against the existing system of distributing 
farm products. The farmers of the country protest against 
the ‘‘spread’”’ between the wholesale prices of farm products 
and those paid by the consumer. They protest that the pri- 
vately owned marketing agencies—middlemen, they call 
them—receive too much for their services and proportion- 
ately too much profit. Individual marketing has failed the 
farmer. It has not placed the producer who sells in a place of 
opportunity equal to that of the man who buys. Therefore, of 
necessity, farmers are eagerly banding themselves into mark- 
eting associations which promise them some protection, bet- 
ter rewards, and more efficient distribution. 

Co-operative marketing rarely means direct marketing. 
It means the setting up of a marketing agency or “‘middle- 
man” controlled by farmers to perform the services rendered 


DEVELOPMENT OF CO-OPERATIVE MARKETING 3 


by a ‘‘middleman” who works for his own reward or a pri- 
vately owned organization. It is a form of organization en- 
abling farmers to purchase the services of marketers. 

There have been three main types of organizations for 
co-operative selling of farm products in the United States. 
First, we had an extensive development of local associa- 
tions. Organization began between 1880 and 1890 and con- 
tinues to the present. The Division of Agricultural Co- 
operation of the United States Department of Agriculture 
has record in 1924 of about ten thousand local buying and 
selling farmers’ business organizations. About one thou- 
sand of these do buying only. Of the remaining nine thou- 
sand a small proportion are farmers’ business organizations 
on the ordinary corporation plan. These local co-operative 
associations have an average of about forty to fifty members. 
Second, federations of local associations for business efficiency 
have been formed in many sections of the country. The first 
of these was the California Fruit Growers’ Exchange organized 
in 1895. There are today about twenty-five such federations, 
serving probably sixteen to eighteen hundred local associa- 
tions. Third, there has been a spectacular movement for the 
organization of state-wide or regional marketing associations, 
embracing farmers in a large area. The first of these was 
started among the raisin-growers of California in 1912. There 
are today probably about eighty or ninety such associations 
with a total membership of nine hundred thousand to one 
million.! These types of organizations are discussed in chap- 
ter iv, and they are considered separately throughout this 
study. 

The advantages and limitations of co-operatives as dis- 
tributing agencies for their members are becoming more and 
more apparent. Among the positive advantages of a well- 
organized co-operative as a distributing agent are, according 
to Professor Theodore Macklin, of Wisconsin, the following: 


Cooperation gives cooperating farmers the net profits of market- 
ing; reduces the cost of marketing so far as this may be done; im- 


1 Most of the figures in this section on the extent of co-operation are 
estimates by the author based on data of the Division of Agricultural 
Co-operation or made after conference with officers of the Division. 


4 FARMERS’ CO-OPERATIVE MARKETING 


proves old and creates new marketing services for its members; 
readjusts standards of production; gives farmers confidence in the 
marketing system because they own it and control its policies; 
develops leadership; has taught cooperators the commercial point of 
view.! 


Professor Macklin comes to these conclusions after intensive 
study of co-operative marketing in all parts of the United 
States and other countries. 

He points out, however, that the ‘‘net profit of marketing 
is the least important reason for cooperating. It amounts in 
the cheese business, one of the best available examples, to one 
cent for each dollar’s worth of cheese sold.”’ He also states 
that reduction of the cost of marketing is much more impor- 
tant, and that 


cooperative cheese marketing has already reduced marketing costs 
by four cents on each dollar’s worth of cheese sold. This suggests 
that the lowering of market costs through cooperation is four times 
as important as trying to get middleman’s net profit. .... Coopera- 
tive companies have not obtained this benefit quickly. It has been 
slow work. 


Co-operative management, in itself, is probably no more effi- 
cient than private management—that is, the advantages of 
co-operation are numerous compared to wasteful individual 
marketing, but a well-managed co-operative probably can- 
not become more efficient than a well-managed private enter- 
prise. In fact, there are evidences that the difficulties of co- 
operative management are very numerous, due to less central- 
ization of authority and the necessity of satisfying a large 
number of individuals. Co-operative associations are also 
limited by peculiar conditions surrounding the sale of certain 
products. In the case of wheat, for instance, it is doubtful if 
a large co-operative marketing agency could bring more than 
the most meager benefits, in view of our large exportable sur- 
plus and the influences of world-demand upon prices. In this 
connection it is worth noting that Professor John D. Black, 
of the Department of Economics at the University of Min- 
nesota, says that co-operative marketing has been only “‘one 


1 Indiana Farmer’s Guide, April 26, 1924. 


DEVELOPMENT OF CO-OPERATIVE MARKETING 5 


of the most important secondary factors in improving the 
farmers’ incomes’”! in his state. (Italics ours.) 

This leads us to observe that the conspicuous financial 
successes of co-operatives have been confined to (1) those 
which have had a large proportion of their crop under control, 
and (2) those which had under contract a large proportion of 
a specialty for which consumption in domestic markets could 
be increased by advertising and an application of high- 
pressure merchandising borrowed from so-called big business. 
The success of some of the newly organized tobacco-growers’ 
associations is said by competent students to be partly due 
to the fact that they have control of a large proportion of the 
crop and can “dominate the market’”’ or exercise some arbi- 
trary price control. The conspicuous California co-operatives 
—made up of the growers of citrus fruit, raisins, prunes, and 
apricots—all have had control of large proportions of the 
annual supply of their products, and have been fortunate in 
that the prosperity of the country’s cities, their own excellent 
advertising, and the education of the public to the advantages 
of eating more fruit by many agencies have all contributed to 
their success. It may be further noted that: 

1. These conditions have not as yet been duplicated in 
handling wheat, eggs, live stock, butter, cheese, potatoes, and 
other products. 

2. The co-operatives having the most successful financial 
histories have not been able to guard against overproduction 
or to introduce any effective guidance of production. A co- 
operative that has been financially a great success may stimu- 
late overproduction. The prune- and the appricot- and the 
raisin-growers of California, who have had “successful” ex- 
periences in a rising market, are today suffering from over- 
production. 

3. Both federations of local associations and regional asso- 
ciations may become monopolistic, but the regional associa- 
tions seem more often to have tended in this direction. The 
regional association usually makes provision in contracts that 
the organization will not be formed until a certain propor- 


1 From a letter to the author, December 138, 1923. 


6 FARMERS’ CO-OPERATIVE MARKETING 


tion of the crop of the state or region or the branch of farming 
affected is definitely pledged and under control. Federations 
do not seem to have controlled the supply of their product as 
rigidly. 

4. This means that some leaders of agricultural co-opera- 
tives have introduced a new element not contemplated by 
those who laid down the theory of historic co-operative eco- 
nomic enterprise. The three fundamentals which have com- 
monly constituted the economic basis of co-operative organ- 
ization are summarized by Dr. E. G. Nourse, of the Institute 
of Economics, as follows: 

1. Increased efficiency or reduced cost of service. 


*2. Popular distribution of savings or profits. 
3. Democratic control.1 


Certain leaders of agricultural co-operatives have thus in- 
troduced the element of control over a large proportion of 
the supply of the product, and consequently have given their 
organizations considerable bargaining power or arbitrary 
price control. | 

There are marked differences between farmers’ marketing 
co-operatives and the consumers’ co-operatives in the United 
States. Consumers’ co-operation in is this country largely 
urban. The consumers’ co-operative movement consists of 
stores, bakeries, restaurants, laundries, housing associations, 
banks, ete. These societies are sometimes federated, but there 
is no parallel in the consumers’ movement to the regional 
type of organization. 

In general, consumers’ co-operation has been marked by 
uniformity of methods. These methods are summarized as 
follows by Dr. J. P. Warbasse, president of the Co-operative 
League of the United States of America: 

1. Each member shall have one vote and no more. 

2. Capital invested in the society, if it receives interest, shall 
receive not more than a fixed percentage which shall be not more 
than the minimum prevalent rate. 

3. If a surplus-saving [“‘profit’’] accrues, by virtue of the differ- 


ence between the net cost and the net selling price of commodities 
and service, after meeting expenses, paying interest [wages to cap- 


1 American Economic Review, December, 1922. 


DEVELOPMENT OF CO-OPERATIVE MARKETING 7 


ital] and setting aside reserve and other funds, the net surplus-saving 
shall be used for the good of the members, for beneficent social pur- 
poses, or shall be returned to the patrons as savings-returns [“divi- 
dends”’] in proportion to their patronage.! 


The summary made by the author of this bulletin in Pace- 
makers in Farmers’ Cooperation states the situation have 
farmers’ organizations: 


In view of the varieties of agricultural organizations in the 
United States, it is rather hard to describe briefly what a farmers’ 
cooperative association is. Types of organizations have been deter- 
mined by outside organizers, by local preference or by existing laws. 
Sometimes associations have been hurriedly formed and methods 
later changed. Probably the popular conception today is that the 
one-man, one-vote rule and the return of “savings” or “surplus” by 
the amount of patronage rather than by the amount of stock held 
makes a concern cooperative. It seems that at least half of the farm- 
ers’ grain associations and the big majority of the creameries, the 
cheese factories, the truck and fruit exchanges, the livestock shipping 
associations, the dairymen’s leagues, the cotton and tobacco associa- 
tions, and those organizations started by the Farmers’ Union, the 
American Society of Equity, the Farm Bureau and the Grange, may 
well be classed among the more cooperative groups. It would in some 
cases be very difficult to draw the line between the more and the 
less cooperative associations.? 


Dr. E. G. Nourse sums up the distinction between agri- 
cultural and historic consumers’ co-operation as follows: 


Agricultural cooperators in the United States have made no 
attempt to introduce any distinctively new principle of industrial 
guidance such as is proposed in the elaborate scheme of consumer 
cooperation. But it is proposed to put the members of the agricul- 
tural industry in an economic position compatible with the demands 
of modern economic life, both as to productive efficiency and as to 
distributive justice.® 


There are, on the whole, no co-operative relations between 
farmers’ marketing and city-consumer co-operative organiza- 
tions. The leaders of farmers’ co-operatives have only in ex- 
ceptional cases taken steps to establish harmonious relations 


1 J. P. Warbasse, Cooperative Democracy. New York: Macmillan Co., 
1923. 


2 Benson Y. Landis, Pacemakers in Farmers’ Cooperation. New York: 
Home Lands, 1922. (Out of print.) 


3 The American Economic Review, December, 1922. 


8 FARMERS’ CO-OPERATIVE MARKETING 


with consumers or organized labor, and have had their most 
frequent contacts with urban industrial and financial leaders. 
The loans to large farmers’ co-operatives have usually come 
from the large banks and the federal government’s credit 
agencies. 

The development of co-operative marketing has been 
marked by some severe conflict between the farmers’ organ- 
izations and organized private enterprise. The following 
statement from the United States Department of Agriculture 
gives some information about a typical situation: 


The Federal Trade Commission, under date of December 28, 
1923, issued an order directing the Chamber of Commerce of Minne- 
apolis, its officers, board of directors and members, and the Manager 
Publishing Company, its officers, agents, and employes, to cease and 
desist from combining and conspiring among themselves and with 
others, directly or indirectly, to interfere with, or injure, or destroy 
the business or the reputation of the St. Paul Grain Exchange [a 
farmers’ co-operative organization] or its officers and members, or 
the Equity ‘Cooperative Exchange, or its officers and stockholders, 
by publishing or circulating any false or misleading statements con- 
cerning the financial standing or business methods of either of the 
exchanges.! 


1 Agricultural Cooperation, January 14, 1924. 


CHAPTER II 
“BUSINESS-ONLY” CO-OPERATIVES 


A study of the attitudes of the managers of co-operative 
marketing associations toward the social welfare and social 
organizations and of the actual social activities of these eco- 
nomic organizations reveals unmistakably that the co-opera- 
tors are divided into two sharply defined groups. The first and 
by far the larger group takes the position that a co-operative 
marketing association is a purely business organization. The 
association has no responsibilities except to sell products for 
the highest price obtainable, and to return to the individuals 
the largest possible amount of money. Social results will come 
through making larger sums of money available for the fam- 
ily’s consumption. The relations between economic and social 
organizations should be decidedly of an indirect sort. The 
second group, much in the minority, holds that a co-operative 
has social as well as economic objectives; or that a co-opera- 
tive may conduct certain social activities for members; or that 
a co-operative has responsibilities to co-operate with social 
organizations to promote the social welfare. This statement is 
based upon the following investigations: 


1. Data received from the managers of 1,052 grain, live- 
stock, truck, fruit, dairy, and other local associations in all 
states of the country reveal that 617 or 58.6 per cent profess 
to carry on no social or educational activities of any kind or to 
make any contributions in money to non-commercial organ- 
izations in their communities or neighborhoods.! The man- 
agers of 355 out of this group of 617 associations give reasons 
for their inactivity in the social fields as follows: 

Thirty-nine per cent of these managers say, in substance: 
“This is a business-only organization.” Typical comments 
are: 


1A questionnaire was sent to five thousand. The details of this in- 
vestigation are given in chap. iii. 


9 


10 FARMERS’ CO-OPERATIVE MARKETING 


We are a corporation doing business in the same way as any 
private concern. We have built up our business by selling quality 
products and giving a square deal; we hardly ever have to appeal 
for anyone’s trade because we are a co-operative concern..... We 
run an elevator, not a social club. .... We are not running an edu- 
cational establishment. .... Human nature is too selfish even to 
talk about co-operation. .... There is no such animal known. ... . 
We do not need to conduct social activities; we get business without 
them... . We have never thought about social affairs..... 
Social activities are not practical... .. We do not mix our business 
with our pleasures. .... The social activities have very little to 
do with the successful operation of an association. .... It has been 
the opinion of the directors that people should see the advantages of 
the organization as a business..... Nothing counts but the al- 
mighty dollar..... As a general rule, business does not mix with 
anything else, especially social activities. Once in a while a successful 
educational and recreational meeting might well be held by such 
an institution but the interest lags if followed up regularly. This is 
my conclusion after eleven years of work for four different farmers’ 
co-operative organizations. .... This is a creamery, not a church. 
.... There is no interest in co-operation; price is the controlling 
feature of success, as evideneed by fourteen years of experience. 
.... The size of the check is what counts most and we work hard 
for thats ie Social activities would mean an expense with no ap- 
parent immediate profit..... The farmers are too busy trying to 
make a living..... We are doing well enough in a business way. 
. ... The writer desires to say that there is very little difference be- 
tween an ordinary corporation and a so-called co-operative com- 
pany. The reason for this is because the success of any institution 
depends so much upon the management. Our experience is that the 
co-operative part of the plan means nothing. The one-vote plan is 
only a discouragement to keep out the man with money to invest, 
hence the co-operative usually suffers from lack of sufficient financial 
support. As far as social activities are concerned, these matters are 
taken care of by the churches and other organizations planned for 
that purpose. 


Twenty-four per cent of these 355 managers giving rea- 
sons for their purely economic activities and objectives state, 
in substance, that social activities are taken care of by other 
organizations. This is an important consideration, and is one 
of the chief reasons given by those within and without the 
co-operative movement for advocating a very limited and 
economic field for the co-operative association in the local 
community. It is perhaps significant, however, that this rea- 


“BUSINESS-ONLY” CO-OPERATIVES i 


son is cited by only one-fourth of the managers who answered 
this question. 

Fifteen per cent of the managers state, in substance, that 
social activities are not desired by the membership or that it 
would be impossible to promote them. Typical comments by 
this group include: 

They leave everything to the manager..... Farmers are too 
busyeniets,. It is hard to get our members to the annual business 
meeting..... Social activities were tried and did not work..... 
Our members do not have enough co-operative spirit..... We 
voted to discontinue even the annual picnic because few were inter- 


ested..... Our members lack interest in the association..... 
Farmers don’t stick to their own organization. 


Seven per cent of the managers state there are no funds 
for any local social or educational activities. One manager 
remarks: ‘‘Our members want all the money individually and 
don’t want to spend any collectively.’”’ Another says: ‘‘We 
spend our time trying to make ends meet.” 

Two per cent state that there is ‘‘no leadership,”’ and two 
per cent that there is ‘‘no time.’”’ Some in the latter group 
state that “the manager has no time.” 

The remaining 11 per cent of the managers reporting give 
a variety of other reasons. Included in this group are a small 
number who evidently would like to carry on social activities 
or who believe them worth while. Comments of managers 
are: “This association needs a good rousing up and social 
affairs might do it..... We have no knowledge as to how 
to go about it.”” Scattered membership is given as a reason in 
a few western sections. 

It may be of some significance that the business-only rea- 
son is given by the managers of one-third the fruit associations 
(including a good representation from California), by one- 
fourth of both the truck and dairy group, by only one-sixth of 
the live-stock group, and by only one-ninth of the grain asso- 
ciations. The last two are chiefly found in Central and North- 
west United States where the local co-operative seems more 
frequently to take an active part in community life. The fact 
that the live-stock shipping associations are frequently, com- 


12 FARMERS’ CO-OPERATIVE MARKETING 


paratively speaking, loosely organized, without capital stock, 
by a group of neighbors meeting on various occasions, prob- 
ably is also a factor in giving them a different attitude. These 
variations of organizations by types of commodity cannot be 
adequately explained by the data gathered in this study, and 
further investigation is needed. 

Results of those associations which do carry on some social 
and educational activities are discussed in chapter ii. 

2. A study of thirty-three typical local associations in the 
Middle West on an intensive basis by the author and by stu- 
dents in rural sociology and economics under the supervision 
of their professors reveals that fourteen of these have con- 
ducted some social or educational activities; that six are in 
communities which have farm bureaus or farmers’ clubs, to 
which many members of the co-operatives belong, and there- 
fore the co-operative carries on no special activities; that 
thirteen have conducted no social activities though there is 
no farm bureau, grange, or farmers’ club. These data are pre- 
sented in chapter iii. 

3. A study by correspondence of fifteen (out of a total of 
about twenty-five) federations of local associations reveals 
that only one of these has conducted social activities among 
local associations or their members. The manager of one 
federation states: ‘‘We tried democracy and brotherhood 
twenty-five years ago and they didn’t work. Co-operatives 
have got to stick to business.’”’ These activities are described 
in chapter iil. 

4. A study by correspondence of the social activities of 
fifty regional associations (out of a total of about eighty in the 
country) reveals that twenty-three have no local groups func- 
tioning and conduct no social activities; fourteen have local 
groups functioning for business purposes only; ten have local 
groups which carry on social as well as business activities; 
three have very close affiliations with state farm bureaus 
which carry on a social and educational program. Social ac- 
tivities are described in chapter vi. 

We shall now consider in detail the social activities and 
results of various co-operative associations. 


CHAPTER, III 


SOCIAL AND EDUCATIONAL ACTIVITIES OF 
LOCAL ASSOCIATIONS 


Five questions in regard to social and educational activi- 
ties were asked of the managers of a list of approximately 
5,000 local farmers’ business organizations secured from the 
Department of Agriculture.1 Replies were received from 1,052 
managers. | 

The first question was: What social or recreational activi- 
ties did your association carry on for members or for the com- 
munity during 1923? Approximately 1 association out of 10 
reporting (11.41 per cent) conducted at least one recreational 


1 This list of names was recently gathered by the Division of Agri- 
cultural Cooperation of the Department. It comprised the names of the 
first 5,000 out of 10,000 associations, of which the Department now has 
record. These names were gathered uniformly from all sections of the 
country, though the names from the Middle West and Northwest pre- 
dominate because these sections have most of the local associations. It 
is certain, however, that large groups of the predominant types of these 
associations were reached by this method. 

The questionnaire revealed that 8 per cent of the organizations re- 
plying were not co-operative, i.e., did not return surplus to members by 
the amount of business done and did not have the ‘‘one-man, one-vote 
rule.”? These are not included in this study. It was also found that a 
much higher proportion of returned questionnaires came from the 
creameries and cheese factories than from the other groups and that the 
return from the grain associations was somewhat lower than average. 
The total returns from the co-operative associations included in this 
study were as follows: 


Creameries and cheese factories......... 353 
PLTH CE ASSOCIATIONS vt cakes ales ote e hr 73 
TTUIe BSsOCIAtIONS |. oc sic teehee ee ae et 111 
Live-stock shipping associations......... 221 
CGTAIN ASSOCIATIONS 2 Oi eee ad dees Lk eke 233 
AIPOUNEMASSOCIAUONS. se tee ees 61 

TROEAL Oe See IO ay Ware fey cin 2 ae eRe 1,052 


In considering the results of a questionnaire of this kind, it is impor- 
tant to note that the proportion having the activities under inquiry is 
probably lower among those which did not supply information. 


13 


14 FARMERS’ CO-OPERATIVE MARKETING 


event.! Out of the 120 associations putting on recreational 
affairs, 74, or 61.7 per cent, conducted only one, and 10, or 
6.3 per cent, conducted twelve or more. These 120 associa- 
tions held a total of 364 such meetings during 1923, or an 
average of three.? In a majority of cases, this event was either 
the annual picnic of the association or was held in connection 
with the annual business meeting. There was only about one 
meeting per year for approximately every three associations 
studied. 

The second question to some extent duplicated the first, 
but was designed to find out how frequently women particu- 
larly and the entire families of the members were brought in- 
to contact with the co-operatives: How frequently did your 
association hold gatherings or events for the entire families 
of the members during 1923? The returns show that 114, or 
10.8 per cent, of the associations held such gatherings.* The 
total number of meetings was 535, or an average of 4.7 per 
cent for those holding them. Fifty of these 114 associations, 
or 43.8 per cent, held only one gathering during the year. 
Twenty-three, or 20.2 per cent, each held twelve or more such 
meetings. There is one gathering yearly for about every two 
associations.‘ 

The third question was: What contributions in money 
were made by the co-operative to non-commercial organiza- 
tions or causes in the community during 1923? Here we find 
the most frequent social contribution of the co-operatives. 
Two hundred and ten associations, or one-fifth of the total, 

1 The proportions range as follows: 4.5 per cent of the fruit associa- 
tions; 6.9 per cent of the truck associations; 10.8 per cent of the grain; 
rae. a cent of the dairy; 14 per cent of the live stock; 18 per cent of all 

2 This average ranges as follows: 1.6 for the fruit associations bold- 


ing meetings; 2.2 for the grain; 2.3 for the dairy; 3.1 for the miscellaneous 
group; 4.4 for the truck; 4.8 for the live stock. 

3 Considering the groups by the main commodity handled, the pro- 
portions range as follows: truck associations, 4.1 per cent; live stock, 
9.5 per cent; dairy, 11 per cent; grain, 11.6 per cent; fruit, 11.7 per cent; 
all others, 18 per cent. 

4 The averages for the different associations range as follows: fruit, 
2 per year for those reporting meetings; dairy, 2.8 per year; grain, 4.3 
per year; all others, 5.6 per year; live stock, 8.6 per year; truck, 12 per 
year (with only a small number of the last group reporting). 


SOCIAL AND EDUCATIONAL ACTIVITIES 15 


reported making such contributions in money to non-com- 
mercial organizations. One hundred and forty-three of these 
210 mentioned definite amounts and the name of the organ- 
ization assisted. These 143 associations contributed a total 
of $7,780.50 during 1923, an average of $55.46 per association. 
They contributed to an average of three different commu- 
nity organizations. Organizations mentioned include: schools 
(e.g., furnishing food for hot lunches), band, a university en- 
dowment fund, community halls and houses, Red Cross, 
health associations, church buildings and causes. An exam- 
ination of these amounts contributed, however, discloses that 
probably the majority must be termed nominal or that they 
are made in answer to a specific appeal of a community or- 
ganization. The number of associations which deliberately 
plan these expenditures of money for the social welfare is very 
small. The average yearly contribution is lowest for the live- 
stock shipping associations reporting (because of the way they 
are organized, with a manager paid by commissions on ship- 
ments and with small amounts of money in the treasury); 
that of the dairy, grain, and miscellaneous group is close to 
the average; while that of the fruit associations is high, but 
only a few of these associations report contributions and list 
the amounts. The probability is, of course, that those associa- 
tions which state that they make contributions but do not list 
the amounts spend smaller amounts than those reporting defi- 
nite sums. Therefore, it must be concluded that though 
money is the most frequent social contribution, it cannot be 
said to be of such significance in at least half of the communi- 
ties in which the co-operatives spend money in this fashion.! 

1The data on contributions in money from the non-co-operative 
farmer business organizations were as follows: 89 replies were received 
from associations of this type. Of these, 31, or about one-third, state 
that they contribute money to non-commercial organizations and causes, 
but only 13 give the amounts. These claimed to contribute a total of 
$1,151, or an average of $88.54 yearly. Though this amount is higher 
than that of the co-operatives reporting, the data are probably from too 
small a number of associations to make it comparable with that on the 
co-operatives. In this connection an opinion is worth noting. Professor 
John D. Black, chief of the Division of Agricultural Economics of the 
University of Minnesota, writes: “As to improving standards of living, 


the effect [of co-operatives] has been no different than the effect of any 
other improvement in farm incomes. .... Co-operation has been one 


16 FARMERS’ CO-OPERATIVE MARKETING 


In regard to the educational work of the co-operatives 
under consideration, the questions were: 

a) What has your association done to educate its mem- 
bers in co-operative principles and methods during 1923? 
Two hundred and fifteen associations, or over a fifth of the 
total, describe some specific piece of educational work.! The 
most frequent method is that of having speakers and lecturers 
(in many cases at the annual meeting). The sending of a co- 
operative journal to all members with the funds of the associa- 
tion comes next in importance. Then follow, in the order in 
which they are most frequently mentioned, the mailing of 
pamphlets and other literature, special local educational meet- 
ings to discuss problems, news articles in local papers, paid 
advertisements in the local papers, mailing multigraphed let- 
ters, personal canvasses of the membership, the use of field 
men full or part time (by a few local associations who are 
members of federations). Three-fourths of the associations 
reporting educational work use only one of the foregoing 
methods; the remaining fourth use two or more. Some man- 
agers say that educational work has been neglected. Among 
those not reporting educational work—and to a less extent 
among those reporting some—frequent remarks are: ‘Fair 
dealing is the best education’’; “‘Fair dealing and good prices 
are the best education.”’ One says: ‘‘We are not educating 
people’’; another: ‘‘We do not feel justified in spending money 
for education.’”’ A small minority would probably agree with 
the man who states that ‘‘the co-operative movement is 
gaining strength but is a process of education and it takes time 
to accomplish results.”’ 

b) What has your association done to educate those who 
were not members in co-operative principles and methods 
during 1923? Only fifty-six, or 5.3 per cent, profess to have 


of the most important of the secondary factors in improving the farmers’ 
incomes, and a very appreciable part of the increase in the last twenty 
years has been used to improve the standard of living in Minnesota, as 
in other similar states.” 


‘ The proportions of associations conducting some form of education- 
al work range as follows: For truck associations 13.7 per cent; live-stock 
shipping associations 15.4 per cent; fruit 18 per cent; dairy 20. 7 per cent; 
grain 25.3 per cent; all others 31.1 per cent. 


SOCIAL AND EDUCATIONAL ACTIVITIES 17 


done educational work of this kind. The methods used are 
the same as those given under the first question in regard to 
the education of members. The replies indicate, however, 
that a great deal of personal solicitation of new members is 
constantly going on. Much of this is educational, depending, 
of course, upon the information of the solicitor. A small pro- 
portion of the associations studied are also in communities 
in which the great majority of the farmers are members of 
the co-operative. In one conspicuous instance, the officers and 
members of a creamery succeeded in organizing the shippers 
of live stock and the growers of tobacco into separate associa- 
tions. In another instance, one man with a private income has 
given most of his time for a period of five years to educational 
work for the co-operative in his community. 

It will be seen that some co-operative associations have 
brought about conspicuous changes in their communities. 
Ten thousand dollars for beauty was included in the building 
program of the Lakeland Citrus Growers’ Association of Lake- 
land, Florida. The wooden packing-house built when the As- 
sociation was organized in 1909 had been outgrown. A site 
overlooking Lake Mirror was purchased and plans were ac- 
cepted for a beautiful tile building in the Spanish type of 
architecture with towers and large, arched windows. The 
building is buff with white trimmings and the grounds are set 
with palms and other trees. It was estimated that the various 
artistic features increased the cost by $10,000. The total cost 
of the plant and the site was $50,000. In Hudson, Iowa, the © 
co-operative creamery spent $400 during 1923 to improve 
sanitation on farms and the quality of the product. In Aiken 
County, Georgia, both white and colored farmers sell their 
produce and buy supplies through the Farmers’ Exchange. 
The white and colored farmers are allied in an economic move- 
ment for the “mutual protection of all the farmers of the 
county,’ and this may prove to be helpful in building inter- 
racial good will. The Nashville, Michigan, co-operative 
creamery ‘‘demands sanitation of its patrons,’’ and within the 
past few years has rendered the people of this town an unusual 
service. The town had a bad milk supply. The co-operative 
creamery, though not interested in the distribution of whole 


18 FARMERS’ CO-OPERATIVE MARKETING 


milk, took over the distribution of the town’s milk, put it on 
an efficient and sanitary basis, and then turned it over to a 
distributor who could render competent service. The co- 
operative creamery association of a Tennessee county con- 
tributes $120 yearly for five years to a unique endowment 
plan of a university located in the county. In a frank descrip- 
tion of the practices of this co-operative the manager writes: 

We do it to help the school. .... The board and management 
of the creamery are very much in favor of the school . . . . but while 


it is helpful the motive may be said to be selfish and we call the 
expenditure advertising. The students will help our trade. 


A better idea of the social implications of some of these 
local associations is secured by intensive case studies. Data 
were secured by the author and by students of several uni- 
versities under the supervision of their professors of economics 
or sociology on thirty-three associations which are representa- 
tive of various types of organizations and communities. Seven 
are creameries, fifteen are grain associations, eleven are live- 
stock shipping associations. Fourteen of these thirty-three 
were formed partly or altogether by outside agencies, eight 
by state or county farm bureaus, four by managers of neigh- 
boring co-operatives, and two by extension workers of the 
college of agriculture and the United States Department of 
Agriculture. 3 

In seven cases there was apparently a favorable attitude 
on the part of town or village business men toward the organ- 
ization of the co-operative; in one conspicuous community 
among these the business men and farmers jointly paid the or- 
ganizer who was brought in to form the co-operative creamery ; 
in other cases the business men are described as having been 
“friendly” or ‘‘favorable.”’ 

In six cases, the business men were divided. In one com- 
munity among these the creamery company which opposed 
the farmers’ creamery soon had to close, but the bank was 
liberal and friendly to the co-operative: in this community, 
the farmers and business men had worked together on road- 
building campaigns. In another section, the Chamber of 
Commerce indorsed the co-operative but the fertilizer com- 
pany fought its organization. In another case, the organiza- 


SOCIAL AND EDUCATIONAL ACTIVITIES 19 


tion was sponsored by business men and farmers, and the only 
opposition came from the competing elevator. In another, 
the business men were ‘‘mostly neutral,”’ though the private 
grain company opposed the co-operative. 

In thirteen cases, the business men are described as hav- 
ing been ‘timid in indorsement”’ and “‘little interested.” 

In seven instances, they were unitedly hostile; one group 
expressed their fear that the use of co-operative methods 
would extend beyond selling grain to buying; another group 
encouraged the buyers who attempted to wreck the co-opera- 
tive by offering the members especially high prices. 

Only five of these thirty-three associations have member- 
ship contracts with their members, requiring the delivery of 
all the products of the particular commodity that is sold. 
Four of these claim to have had no contract-breaking or so 
small an amount that no attention has been paid to it. One 
reports a small amount of contract-breaking, but has taken 
no action against violators nor has it endeavored to arouse 
the members on the question. Two of these five say that their 
efforts to maintain loyalty are altogether in working for high- 
er prices; the others rely simply on the advantages of the 
ordinary business routine plus the contract to keep their mem- 
bers loyal. Among twenty-eight associations which have no 
contracts, three make special efforts to keep their members 
loyal; one by community meetings, one by frequent meetings 
of members in schoolhouses and illustrated lectures, one by 
frequent publicity in the local press. Two others say that 
“fair dealing in business” is all that is required to keep mem- 
bers loyal. 

Considering the participation of these thirty-three organ- 
izations in the social life of the community, we find that eight 
have close affiliations with other farmers’ social organizations, 
i.e., large numbers of the members of the co-operative also 
belong to the social and educational organization which takes 
care of these interests of the farmers. In seven instances, this 
is a farm bureau and in one a farmers’ club. One of these 
organizations owns a large hall which is used occasionally for 
social purposes. 

Thirteen organizations have conducted some social or edu- 


20 FARMERS’ CO-OPERATIVE MARKETING 


cational work of their own. During 1928, one held community 
dances; one, educational meetings of growers; one held an 
annual picnic and conducted education for better sanita- 
tion; one put on a community fair and other social meetings 
and contributed money to social organizations; one voted 
as a unit on one political issue, contributed $100 for good 
roads, held a picnic, and temporarily took over the town’s 
milk supply, improved it, and put it into the hands of a 
competent distributor. 

These studies emphasize the fact that co-operatives as 
organizations have numerous relationships with other organ- 
izations in the rural community; that the members of a co- 
operative as individuals have diverse local interests; that a 
certain proportion of co-operatives make recognition of and 
organize those diverse interests (or closely affiliated organiza- 
tions do); that some are conducting social activities and 
education and are making significant and direct social contri- 
butions to their communities; but that others maintain a 
co-operative on a business-only basis. 

Out of fifteen federations of locals studied by correspond- 
ence, one (the California Fruit Growers’ Exchange) for a time 
employed a field man to conduct social work among the local 
associations or their communities. The work centered largely 
around the camps provided by the local associations for their 
Mexican laborers engaged in picking, grading, and packing 
fruit. Practically all of the work was done in co-operation 
with local social, educational, or health agencies. The field 
worker of the California Fruit Growers’ Exchange acted only 
in an advisory or organizing capacity. At La Habra, where 
the work was first started and was most noticeably successful, 
the local co-operative marketing association provided a build- 
ing for school purposes and a house for the teacher. The asso- 
ciation, the local school authorities, and the state department 
of education jointly paid the teacher’s salary. The teacher 
conducted social and recreational activities as well as the 
school work. This work has now been taken up by a small 
number of the schools in Orange County. The Union High 
School at Fullerton has employed several teachers to carry 
on this type of educational work. 


SOCIAL AND EDUCATIONAL ACTIVITIES 21 


Another type of work was begun at San Dimas in co- 
operation with the county health department. The local asso- 
ciation furnished the building and equipment and the county 
paid the nurse. This type of work has also been promoted in 
several other localities. 

The success or failure of these projects is said by the 
former director of the work to depend solely upon the teacher 
or nurse. All the social work which was organized is now in 
the charge of local agencies, and the California Fruit Grow- 
ers’ Exchange is no longer promoting it. It is being continued 
by these agencies in about a dozen communities. 

There are obviously social contributions which some or 
many co-operatives make beyond those which we have tried 
to describe or measure here. These are still largely in the 
realm of the observations or opinions of co-operative organ- 
izers, sociologists, economists, educators, etc. It is possible, 
however, that a summary of these opinions and observations 
is of some significance. For example, the writer asked for a 
statement on social results of co-operatives from three hun- 
dred sociologists, economists, educators, and officers of co- 
operatives. One hundred and thirty-two replies were received 
from thirty states. Fifty-eight had no information at all to 
offer on this point. Seventy-four answered at least one ques- 
tion. In answer to the question as to their estimate of the 
proportion of co-operatives which have made noticeable social 
contributions, twenty-five gave no answer; eleven said they 
have observed no social results; twenty-seven said that ‘‘few”’ 
co-operatives may be credited with social results; five said that 
‘“‘considerable”’ have made contributions, and six that this is 
the case in a large proportion of cases. Those identified with 
co-operative organizations usually claim social results in a 
large proportion of cases; the others replying are much more 
conservative. Answering the question as to what the chief 
result or contribution has been, fifty-seven make replies as 
indicated in Table I. | 

There is probably real justification for a claim for many of 
these intangible or “‘hard-to-measure”’ results. For example, 
Lloyd 8. Tenny, assistant chief of the Bureau of Agricultural 
Economics of the Department of Agriculture, writes: 


22 FARMERS’ CO-OPERATIVE MARKETING 


I do find almost invariably that where a local co-operative 
marketing association has been functioning successfully for a num- 
ber of years it is easier to get the community together on matters of 
public interest and social betterment than it is in communities where 
there is no co-operative endeavor. 


An observer writes from the state of Washington her opinion 
that “the chief result of the co-operatives in our rural com- 
munities has thus far been to give the people more oppor- 
tunity to get together and have more social life.” Professor 
Ralph Felton, of Cornell University, who for years traveled 


TABLE I 
Promotion of Ghigo Ae eae eee tae toe ee ee a ae 1 
Direct assistance to school and church. ..................... 2 
Indirect fesults: Only ey yD welhoe sn narue emia en Re Laat. ge Reka meg 3 
‘THe (OCUCALION VOL BOULES 4 lee Mol vieRR aR een Oreo od) 7 ee 4 
A higher standard of living due to increased incomes.......... 5 


The spread of co-operation to other enterprises in the community 5 
Direct assistance to community recreation................... 
More social contacts for members... .........-2.-.2cececeees 
The development of teamwork, responsibility, leadership, and 


CLEMGETACY. LN at Lik ate once ans b ae Na ee eth ee 11 

Extension of mutual acquaintance and breaking down social 
DAETIO‘S ie SOUP RARE NE RTS ts 8 ct ee ee ne 12 
DOTA oer a oe ee Cn Ce Bn re ee ee 57 


widely throughout the country, reported a marked difference 
between the attitudes of organized California farmers and 
those of unorganized Idaho farmers, while both were in times 
of depression. The California men with whom he came into 
contact were not complaining so much; they were informed 
on the national situation and on the condition of the markets 
for their crops; they seemed to be bearing the depression to- 
gether in a sympathetic way. On the other hand, in the Idaho 
communities he visited there seemed to be no esprit de corps 
among farmers, and they had no information about the na- 
tional agricultural situation or the state of their markets. 
There is also undoubtedly justification for the contentions 
of Aaron Sapiro that in the California communities in which 
farmers have become prosperous, more money has been made 
available for and found its way into the development of social, 


SOCIAL AND EDUCATIONAL ACTIVITIES 23 


educational, and religious institutions. Of the promotion of 
better race relations by co-operatives, Sidney D. Frissell, of 
the Tri-State Tobacco Growers’ Cooperative Association 
(operating in Virginia, North and South Carolina) writes the 
following: 


My connection with the largest co-operative marketing associa- 
tion of the Southeast convinces me that it is proving one of the most 
effective means to friendly and helpful interracial co-operation. 

I say this advisedly because this is a movement in which 95,000 
white and black farmers of Virginia and the Carolinas are working 
together for their common advancement and welfare without the 
retarding effect of race-consciousness and race-rivalry. 

To make this quite plain, I will state that in our files of contracts 
where the names of those who have pledged to market their crops 
for five years through this association are listed, there is absolutely 
no distinction between white and colored members and I could not 
tell you whether one was white or black, unless I happened to know 
him individually. 

This is a movement in which every member has an equal voice, 
enlists for a common cause, receives exactly the same price for the 
same grade of product and in such a movement we find that working 
together for the common good makes decidedly for friendly race- 
relationships. 

The fact is made evident by the participation of colored dele- 
gates in practically all of our county associations who report the 
progress of the colored locals at the monthly meetings of the hundred 
or more counties which are represented in this association. These 
men are received very cordially by the white delegates and I have 
never known any race-friction in this entire movement. 

To sum up, I believe that when the two races are working so hard 
for a common good, as in this association, that race-consciousness 
and race-jealousies are largely forgotten and we have a much more 
effective interracial co-operation than one which is artificially super- 
imposed or made the subject of much publicity. 


On the other hand, Professor C. G. McBride, of the eco- 
nomics department of Ohio State University, calls attention 
to the fact that: 


There is something of a negative social effect in certain instances if 
there develops a bitter factional fight as a result of differences of 
opinion among the co-operators. This is illustrated very clearly in 
the friction between the poolers and the non-poolers in the Dairy- 
men’s League territory. I understand that in certain communities 
this feeling has become so intense that it has broken up social organ- 
izations and churches. 


24 FARMERS’ CO-OPERATIVE MARKETING 


This condition was due to a disagreement over the methods 
whereby the New York Dairymen’s League Cooperative As- 
sociation should be reorganized. One group entered the 
new Association and signed membership contracts providing 
for compulsory ‘‘pooling’”’ of milk. The dissenters, called 
‘“non-poolers,” withdrew and formed an organization of their 
own. 


CHAPTER IV 


SOCIAL SIGNIFICANCE OF METHODS 
OF CENTRALIZATION 


As stated in the first chapter, co-operative marketing in 
many parts of the country has often been carried on through 
small associations operating in one community. They may 
usually be called “community organizations,’ and are in 
many instances successful because they are deeply rooted in 
the social life of the community. They usually consist of men 
who know each other well. They are formed for the purpose 
of solving local problems—saving handling costs, eliminating 
buyers, local grading, etc. Frequently they handle the several 
products of the community. Sometimes they combine some 
buying with selling. The manager is usually a farmer. Their 
success is often due to the social and spiritual cohesion of the 
members. 

But the business advantages of local associations in most 
cases have been few, due to the fact that they handle only a 
small volume of products and are usually unable to apply 
the most efficient methods of distribution. Seldom have they 
brought about any considerable increase in the use of their 
product. Their managers are usually not trained marketers. 
Organization has often been on a loose, insecure basis and, 
though there are no accurate figures, there have been frequent 
failures among local co-operative associations. The chief 
weakness of local associations, however, is that when un- 
federated, they constantly compete with one another, are 
unable to make a united impact upon the market, and con- 
sequently render only a small service to the individual mem- 
bers. Therefore it has become an axiom in rural economic 
organization that a group of individuals working only in their 
own community through their local association cannot greatly 
better their position. This is in conformity with the whole 
trend of rural organization which seems to be toward provid- 
ing definite links between various community organizations 


25 


26 FARMERS’ CO-OPERATIVE MARKETING 


and county, district, state, or national bodies. In economic 
organization centralization is considered especially necessary, 
however, for business efficiency and in order to avoid harmful 
competition between local groups. 

Two general methods for effective centralization have 

been proposed. The advocates of the ‘‘federation’”’ of local 
associations build slowly and from the bottom up; the advo- 
cates of the other, the ‘‘regional’’ method, build quickly and 
from the top down. Mr. O. M. Kile summarizes the steps of 
building a centralized organization slowly from the bottom 
up as follows: 
The first step was to stir up interest among small groups of neighbors. 
From these a local organization was formed. As their business grew 
and similar organizations developed in nearby communities these 
several groups would federate into county and later into district 
units. Finally, after perhaps another half-dozen years, a central asso- 
ciation would be formed uniting all district groups handling that 
commodity.! 


A statement by Mr. G. Harold Powell, who was for ten years 
general manager of the California Fruit Growers’ Exchange, 
quoted by Mr. Kile, illustrates further the view of advocates 
of this method: 

I do not know of any short-cut ways through which you can 
bring about that basic internal spirit in men that makes them believe 
that working together is the wise way to work out their individual 
and mutual problems. That is a matter of growth; that is a matter 
of evolution; that is a matter of acquiring step by step out of 
abundance of experience. It cannot be done by any revival methods; 
it cannot be done by any short-cut methods. 


In contrast to this method of federation, whose conspicu- 
ous advocate was Mr. Powell, is the “top-down” method, 
whose conspicuous advocate has been another Californian, 
Mr. Aaron Sapiro, a lawyer and the most prominent organizer 
of farmers’ co-operatives in the United States today. Says 
Mr. Kile, in the article quoted above: 

Sapiro plan advocates call theirs the “wholesale” method as con- 
trasted with the older slow-growing “retail” method. 


Sapiro’s favorite method is to hold a big booster mene at 
which his own electric personality, his fine speaking presence . 


1 The Nation’s Business (Washington, D.C.), January, 1923, p. 34. 


SOCIAL SIGNIFICANCE OF CENTRALIZATION = 27 


carry his hearers to the point of effecting an overhead organiza- 
tion. This organization then puts on an intensive membership cam- 
paign, and growers sign an ‘enforceable’ contract to deliver to the 
association all their cotton, prunes or sweet potatoes, as the case 
may be, for a period of years . . . . usually five or seven. The central 
and district organizations then get to work to handle the sale of the 
crop. 


According to Mr. Kile, the advocates of this plan say: 


We recognize the need for active local units and a well-informed 
membership, but we can develop those after we get the main works 
set up and the machinery running. And the big volume of business 
available from the start will enable us to operate more efficiently, 
return bigger benefits to our members and avoid all the years of 
heart-rending struggle that the smaller units have usually found it 
necessary to go through. 


As an illustration of a federation, which is the European 
and the original American scheme of centralization, let us con- 
sider briefly the structure of the California Fruit Growers’ 
Exchange, which was formed in 1895 by local associations 
handling citrus fruit: The individual member is linked to the 
local by contract, the local having in turn a contract with the 
district exchange, and the district with the central organi- 
zation. The contract of this association happens to be for a 
term of years, but members are allowed any year to cancel, 
after giving due notice. The functions of the local association 
in this organization are to pick, assemble, grade, and pack 
fruit. The district exchange further assembles, takes title, 
stores and ships the products. The central exchange adver- 
tises, studies markets, sells the product as agent, and routes it 
properly. The product in this case remains the property of 
the district exchange. Both the district and central exchanges 
operate at their own costs. The district exchange is financed 
by stock purchased by the locals, the federation by stock pur- 
chased by the district exchanges. 

This plan has been widely copied and applied by most of 
the twenty-five federations of local associations so far as 
possible or practicable. (Most federations do not have the 
district exchange.) It preserves considerable powers and au- 
tonomy for the local group. Its advocates feel that it allows 
for sufficient centralization and efficient grading, processing, 


28 FARMERS’ CO-OPERATIVE MARKETING 


packing, advertising, and selling, etc., while at the same time 
it is built up slowly, with stable local groups as a foundation. 
The September, 1928, preliminary statement of the United 
States Department of Agriculture on Cooperation in the 
United States during the Past Decade contains a list of federa- 
tions of local associations as given in Table II, with the date 
of organization and the number of local associations. 

The regional association is a recent American adaptation 
designed to achieve results and to effect organization of farm- 
ers in a wide area, in a short time. As an illustration of this 
type, let us consider the structure of the Oklahoma Cotton 
Growers’ Association, which was organized in 1921. In this 
Association, the individual signs a contract with the central! 
organization. The terms of this contract are such that the 
individual’s important business relations are with the central 
office. The contract is for a period of seven years and is non- 
cancellable. In this regional Association, the central office 
performs all the functions in the marketing process that are 
distributed among the local, district, and central associations 
in the federated type. Control of all the business operations is 
centralized in this office. Government of the Association is by 
a Board of Directors, one director being elected by the mem- 
bers in each “‘voting district.’’? These voting districts are ar- 
ranged in the region organized according to the amount of the 
crop produced. The local associations perform no services in 
the marketing process, and have no powers except to present 
petitions or give advice to the Board of Directors. They do, 
however, provide contact between directors or employed 
officers and the membership, build up mutual confidence, are 
centers for discussion and education, assist in enforcing con- 
tracts, conduct social activities, and thus make for stability of 
organization. 

This method provides for highly centralized control of 
crop and credit facilities, and for efficient grading and mer- 
chandising. But the method of electing directors by large dis- 
tricts, which are usually determined by the tonnage produced, 
prevents close contact between the individual and his market- 
ing association. It is evident that, compared with the feder- 
ated type, the organization is undemocratic. Though the one- 


SOCIAL SIGNIFICANCE OF CENTRALIZATION = 29 


man, one-vote co-operative rule is in effect in these associ- 
ations, the members have practically only one opportunity 
each year to exercise it—when they elect their district direc- 
tor. 


TABLE II 
Date No. 
Name Parnes d a 

California Fruit Growers’ Exchange.............. 1895 192 
Hiorida Citrus WxXchangee a. ot weet elects 2 le ois 1909 99 
(aliformia, Writ, xchange... 2. sy we cece eo clase TOOL a err c0 
Mutual, Orange Wistributors! ese te6es > ake hese oe 1906 25 
California Walnut Growers’ Association........... 1912 39 
United Dairy Association of Washington.......... 1919 6 
Michigan Elevator Exchange. ..................- 1920 93 
Wenatchee District Cooperative Association.......]........ 18 
Wisconsin Cheese Producers’ Federation.......... 1913 160 
California Almond Growers’ Exchange............ 1910 22 
Michigan Potato Growers’ Exchange............. 1918 128 
Florida East Coast Growers’ Association.......... 1917 8 
Tillamook County Creamery Association.......... 1909 25 
Western New York Fruit Growers’ Cooperative 

PACKING ASSOCIATION Writes ola ctc es Wish eek le piece te loak 1920 37 
Chautauqua & Erie Grape Growers’ Cooperative 

PARSOCIELION Par wasiey Match ces serch amie emcee! sre at wae | atu SUN ic 
CU Onst~Catrus LOXCDANZE:. a1.)ehos ck Mice shike coe aveacns |b mameteces 9 
New York Canning Crops Cooperative Association, 

NG HEA ee eS ESROWA yo eoaidions minicloowhy 1920 18 
Empire State Potato Growers’ Cooperative Associa- 

TIOTE OMI s tek eke vise) AMIR EE Gea toe 1921 25 
Arkansas Sweet Potato Growers’ Exchange........ 1921 38 
Minnesota Cooperative Creameries Association, Inc.} 1921 425 
Wenatchee-Okanogan Cooperative Federation.....| 1922 13 
Michigan Bruit: Growers, Inc. 0)... Rilo. beet 1923 25 

FUGUE ee RT a ire otha SR peat otal tenes Pete a tals ols 1,482 


There are probably about eighty regional associations on 
somewhat the same plan as just described. The first was that 
formed by the raisin-growers in California in 1912, though 
they have several times reorganized. Up to 1918, regional as- 
sociations existed chiefly on the Pacific Coast, but they are 
now established in all parts of the country, and the largest 
are among the following tobacco and cotton associations: 


30 FARMERS’ CO-OPERATIVE MARKETING 


TABLE III* 
REGIONAL TOBACCO-MARKETING ASSOCIATIONS 


vin Year |Members, 
Association Formed 1923 


Connecticut Valley Tobacco Association, Hartford, 
Clo) chs GRU TUNING WARMER AN PEN LGD CP gca UR 1922 3,389 
Burley Tobacco Growers’ Cooperative Association,| 1922 85,042 


Dex eto y Oye tas ie Weaiogty ete tu ely tana MAD ONOLE a 1922 85 , 042 
Dark Tobacco Growers’ Cooperative Association, 
Hopkinsville. ye ese ane oi aN kd 1923 58 ,000 
Maryland Tobacco Growers’ Association, Balti- 
More MG ee CO Che Cea me eet LOL ta 1920 4,600 
Tobacco Growers’ Cooperative Association, Raleigh, 
norte la MAM NORTH asa See ke atale AL SDEhNr Sef URED WR re 1922 90 , 226 
Northern Wisconsin Cooperative Tobacco Pool, 
NLAdIsons Was Ls netic Oven iat nual mete se’ eae 1922 6,672 
AOU ct reve Warne ie etd ck RU Apa a TT RULE. Tha. cs a se 332,971 


REGIONAL COTTON-MARKETING ASSOCIATIONS 


Year |Members, 


Association Formed 1923 
Alabama Farm Bureau Cotton Association, Mont- 

POMELY ALAIN eR Me man ee Cn a a er 1922 20,300 
Arizona Pimacotton Growers, Phoenix, Ariz....... 1921 1,283 
Arkansas Cotton Growers’ Cooperative Association, 

Little Rock wArkah. PACA oe eae ie ae aca 1922 10,676 
Georgia Cotton Growers’ Cooperative Association, 

Aublan tee Crain's iva Aash yes Uk gate UN es AI a 1922 36 ,302 
Louisiana Farm Bureau Cotton Growers’ Coopera- 

tive Association, Shreveport, La............... 1923 5,159 
Staple Cotton Cooperative Association, Greenwood, 

USAR NR Ue, AiO acces ire MELT ek vec i ONS 8) 1921 2,470 
Mississippi Farm Bureau Cotton Association, Jack- 

porn) VES Airy es Dey ioah 2 Sa ae Oa ae ri 1923 18 ,040 
Missouri Cotton Growers’ Cooperative Association, 

New: Madrid’ Moers et yy aan wea aenee monrete ge 1923 527 
North Carolina Cotton Growers’ Cooperative Asso- 

ciation, Raleigh: Ni Gace s Nal Nay Aelia aetna 1922 31,892 
Oklahoma Cotton Growers’ Association, Oklahoma 

Brin Jel eC Manan Lp erp FORUM ADD MINE UNL Nes P| 1921 50,618 
South Carolina Cotton Growers’ Cooperative Asso- 

clation;{Coltimbias S:Cernc iu eee ee eee 1922 13,600 
Tennessee Cotton Growers’ Association, Memphis, 

TO ti He eee take ee RENT i pots ee rane ee 1923 6,441 
Texas Farm Bureau Cotton Association, Dallas, Tex.) 1921 30,134 

otal sc oeivig ws hetig ane Gah CIN enn BD to era 227 ,442 





* From September, 1923, Preliminary Statement on Cooperative Marketing, by 
the United States Department of Agriculture. 


SOCIAL SIGNIFICANCE OF CENTRALIZATION 31 


Both these types of centralized marketing agencies usu- 
ally handle only one commodity or a related group of com- 
modities, and both may be called “‘commodity”’ co-operative 
marketing associations. The term ‘‘commodity association” 
has been popularly but wrongly used to designate the regional 
type of organization. Both these plans have been developed 
for handling perishables and non-perishables. 

Probably the most significant points in connection with 
methods of centralization, from the social point of view, are 
the following: 

1. The federation is built upon established community 
organizations. The regional association embraces a large 
number of farmers in a wide area, and provision appears to be 
made in about half the organizations for “informal,” or ‘‘or- 
ganization,” or “contact,” or ‘‘discussion”’ locals, who are 
groups without powers in the marketing process. These ‘‘lo- 
cals’’ do not exist in all associations, however. The federations, 
therefore, seem from a social point of view to be more ‘‘deeply 
rooted” in the communities of the area organized, but the 
regional associations are making significant efforts to become 
“deeply rooted,’’ as will be noted in detail in chapter vi. 

2. The federation may be roughly described as less cen- 
tralized and democratic, and the regional association as 
centralized and undemocratic. 

3. It is as yet too early to evaluate these types of associ- 
ations in terms of business results and to say which has 
proved ‘‘most successful.’”? Most regional associations have 
operated for only a few years. 

4. The chief difficulty in applying the federation plan is 
its slowness. The established local group tends to resist cen- 
tralization and the delegation of powers in the marketing pro- 
cess to a central agency. Probably three-fourths or five- 
sixths of the local marketing associations in the United States 
are as yet unfederated. The chief weaknesses in the regional 
plan, on the other hand, seem to be inherent in the processes 
of building “from the top down.” (Certain of the difficulties 
and tendencies of regional associations are discussed in the 
next two chapters.) 


CHAPTER V 


SOCIAL SIGNIFICANCE OF CO-OPERATIVE 
MARKETING CONTRACTS 


The extensive use of legal contracts between a farmer and 
his co-operative association is a part of the recent process of 
centralization of co-operative organizations. Prior to 1918, 
little use was made of the so-called co-operative contracts out- 
side of the Pacific Coast states, where they were part of the 
requirements of both federations and regional associations. 
Since the war, however, the numerous regional associations 
which have sprung up among growers of tobacco, cotton, 
wheat, and other products have all made use of contracts. 
The promoters of these associations have used their influence 
to secure the enactment in thirty states of special legislation 
sanctioning co-operative organizations and assuring the asso- 
ciation the power to enforce the contracts in the courts. The 
federations of locals which have been recently organized in 
various states are also built upon contracts between local and 
federation and between individual and local. Therefore, it 
may be safely stated that all of the leaders of centralized co- 
operatives make use of contracts binding a member to his 
organization. 

There are certain tendencies in connection with the use of 
contracts which may be briefly noted here: they are of two 
general types: (1) an ‘“‘agency”’ agreement between an asso- 
ciation and its members; (2) a sale and resale agreement, 
whereby the individual transfers title to his products to the 
association. The former is used mainly by associations han- 
dling perishables, the latter by those selling non-perishables. 

Regional associations have in all but a few cases had non- 
cancellable contracts with their members for a term of five or 
seven years. The practice of locals in federations has been 
less uniform. A study made by the writer in 1924 of the data 
in the United States Department of Agriculture on the con- 
tracts of locals in twenty-two federations reveals that the situ- 


32 


SOCIAL SIGNIFICANCE OF CONTRACTS 33 


ation with regard to the contracts of locals and their members 
is as follows: 

1. In fourteen federations, the term of the contract be- 
tween member and local is indefinite, but may be canceled 
during any year, or at any time by a member who wishes to 
withdraw from the association. 

2. In five federations, the term of the contract between 
member and local is for four or five years, but the member 
may cancel any year on giving due notice. 

3. In one federation, the local associations have one-year 
contracts with their members. 

4. In one federation, the contract between member and 
local is for five years, and is non-cancellable. 

5. In one there is no contract between local and mem- 
ber. 

As to the purposes of contracts, there is rather general 
agreement that the contract is partly to assure the officers of 
an association a definite supply of produce. But when depend- 
ence upon the contract to assure organization loyalty is con- 
sidered, the data in the preceding paragraphs reveal that 
there are two points of view. Those co-operative leaders who 
are identified with federations use a contract as one of the 
last and incidental bonds between a member and his associ- 
ation, and rely on his personal loyalty, co-operative spirit, 
and intelligence, and his experience in selling through the co- 
operative, to hold him to the organization. Those men usually 
regard a contract as only a written pledge of the loyalty which 
a member is expected to show toward his organization. They 
hold that co-operation is an attitude of mind as well as a form 
of organization. They do not believe that an association 
should sue large numbers of members in the courts for break- 
ing contracts. One of these men, Mr. G. Harold Powell, gen- 
eral manager of the California Fruit Growers’ Exchange for a 
decade prior to his death in 1921, never paid much attention 
to renewing contracts. Farmers could sell their fruit through 
the Exchange of which he was manager whether they had 
signed contracts or not. Those who had signed contracts 
could withdraw any year on giving notice. He held that an 
organization could never be held together by contracts alone, 


34 FARMERS’ CO-OPERATIVE MARKETING 


but that there were other matters in co-operation of more 
importance than contracts. 

A very much larger number of co-operative leaders, who 
have been mainly identified with the regional associations, 
have had a different view. They have had state laws enacted 
validating contracts, and then have enlisted large numbers of 
members in whirlwind campaigns. They have established cen- 
tralized organizations over a wide area, including sometimes 
tens of thousands of members whose main bond with their as- 
sociation, frequently located at a distance from the majority 
of them, was the legal contract they had signed. These leaders 
have held that an association should in certain cases sue its 
own members and collect damages for violations of contracts 
as provided for in the membership agreements. Some regional 
associations have entered into frequent lawsuits against mem- 
bers who have broken contracts, and have with probably few 
exceptions won the suits, when the issues were clearly defined 
and the question of crop mortgages! did not complicate mat- 
ters. For example, we read that: 

More than one hundred suits have been started by the Burley 
Tobacco Growers’ Cooperative Association against members who 
have failed to live up to their contracts regarding the delivery of 


tobacco. The Court at Madison, Indiana, recently enjoined two 
members from breaking the marketing contracts involved? 


In another case: 


A permanent restraining order was issued in a circuit court of 
Kentucky forbidding a tenant on the farm of a member of the Dark 
Tobacco Growers’ Cooperative Association from disposing of his crop 
outside of the pool.* While it has been the policy of the Tobacco 
Growers’ Cooperative Association, Raleigh, N.C., to enter the courts 
as seldom as possible, it does resort to the courts whenever neces- 
sary to enforce its marketing contract, according to a statement 
recently issued. So far the association has obtained judgment in 


1 Crop mortgages have been a great barrier to the enforcement of 
co-operative contracts, especially in the South. The North Carolina Cot- 
ton Grower (Raleigh) says editorially in its issue of March 15, 1924: 
‘‘Much cotton is raised under mortgage and it is very difficult to secure an 
agreement from the holders of the mortgage to allow this cotton to be 
sold through the cooperative association.” 


2 Agricultural Cooperation, November 19, 1923, p. 16. 
3 Tbid., December 3, 1923, p. 6. 


SOCIAL SIGNIFICANCE OF CONTRACTS 30 


172 cases; it has been granted permanent injunctions in 126 cases. 
It has won 20 of the cases contested before a jury, lost three, taken 
non-suit in one, and had a mistrial in two. Nine of the eleven cases 
taken to the Supreme Court of North Carolina resulted in upholding 
the contentions of the association. One of the contentions of the 
association, that the landlord was responsible for his tenant’s share 
of the tobacco raised on shares, has not been sustained. The second 
case lost before the Supreme Court was a denial of a request [made 
by the association] for a preliminary restraining order in a case where 
the record did not show that the grower had been furnished with a 
statement of his account in response to a request from him. The 
Court held that while it was within the reasonable discretion of the 
association to decide time of sale, it must at any time inform the 
member of the status of his account. 

There has been collected in suits as liquidated damages, attor- 
neys’ fees and court costs, $25,000. The claim division of the asso- 
ciation has settled out of court, on terms favorable to the association, 
131 cases based on violations of contract, and has collected in liqui- 
dated damages approximately $125,000.! 


The experience of some of these regional associations has 
been, however, that this legalistic basis is an insecure one for 
co-operative organization. There have been a few instances of 
waves of contract-breaking involving so large a proportion of 
the membership that it has been absolutely impossible for 
associations to begin to enforce contracts through the courts. 
According to competent students, the Washington Wheat 
Growers’ Association and the Texas Cotton Growers’ Asso- 
cation went through such experiences. One association, that 
of the Peanut Growers in Virginia, resolved in July, 1923, and 
in June, 1924, upon a policy which included the determina- 
tion to operate without lawsuits against members.” In other 
words, the directors of this Association openly asserted to the 
membership: “We will trust you to be loyal and will not pros- 
ecute anyone who is disloyal.”’ The policy is evidently con- 
sidered satisfactory. In certain areas, too, e.g., Texas, Okla- 
homa, and North Carolina, the individual members of region- 
al associations have asserted their desire to have some control 
over lawsuits against their neighbors, and through their in- 
formal organization have taken interesting steps to secure 


1 Tbid., July 14, 1924. 
2 Ibid., December 17, 1923; zbid., June 2, 1924. 


36 FARMERS’ CO-OPERATIVE MARKETING 


contract enforcement in other ways than through the courts. 
For example, we read: 

Colerain local, in Bertie County [N.C.], discussed the matter of 
contract violations at a recent meeting, and after the discussion the 
five officers were appointed a special committee to pass on all mat- 
ters of contract violations. 

One of the local associations of the Oklahoma Cotton Growers’ 
Association recently “tried” one of its own members for breaking 
his contract. The jury, made up of members of the local, rendered a 
verdict of guilty and collected damages of $25 subject to the approval 
of the board of directors. At a later meeting of the directors, the ac- 
tion of the jury was approved.? 


This feeling of local members, plus the realization of co-oper- 
ative leaders that legal contracts are easily evaded by large 
numbers of members if there are no other bonds between them 
and their association, has, in large measure, led to the great 
development of informal local groups within many large 
regional associations, which is described in the next chapter. 

It will thus be seen that written contracts have a definite 
but limited use in co-operative organizations. Experience 
seems to be indicating that they are of value mainly when 
there are other bonds between an individual and his associ- 
ation. There are evidences that the signing of a written con- 
contract does not always indicate that an individual gives 
complete and hearty consent to keep the terms of the agree- 
ment. But when he gives consent and indicates his desire 
before a group of neighbors who are organized, he appears in 
some cases to be more likely to remain a loyal member of his 
association. 


1 North Carolina Cotton Grower (Raleigh, N.C.), March 15, 1924, p. 8. 
2 Agricultural Cooperation, January 1, 1924, p. 10. 


CHAPTER VI 


SOCIAL AND EDUCATIONAL WORK OF 
REGIONAL ASSOCIATIONS 


Three things have taken place among regional associations 
during the past few years which indicate that the business- 
only policy has not been adequate in their experience, and 
that they have departed sharply from it. 

First, some of these associations have widely organized 
local groups for educational and social as well as business pur- 
poses. Women as well as men have become members of these 
groups. , 

Second, four associations have employed trained women 
social workers to assist the families of members in local- 
community work, public-health and child-welfare service, 
and the poo me of social meetings of organized groups of 
members. 

Third, there has been a noticeable change in the public 
utterances of the leaders of some of the associations, indicat- 
ing very plainly that their experiences have called for a defin- 
ite abandonment of the business-only policy. 

A statement from the Division of Agricultural Cooper- 
ation of the United States Department of Agriculture says: 


In most of the centralized [regional] associations there is pro- 
vision for what we call ‘‘organization”’ locals, the purpose of these 
locals being to maintain morale and provide the machinery for 
electing representatives who once a year elect the board of directors.1 


Data on the functioning of these local groups were secured by 
correspondence from fifty regional associations out of the 
approximately one hundred in the country. Twenty-three 
of these do not have local groups organized. Fourteen have 
local groups for business purposes only. Ten have local groups 
functioning for business and social purposes. Three have very 


1 Letter to the author, March 6, 1924. 
37 


38 FARMERS’ CO-OPERATIVE MARKETING 


close affiliations with state farm bureaus, which carry on a 
social and educational program. 

The business-only idea appears frequently in the remarks 
of some of the managers of the twenty-three associations 
which do not have functioning locals: 


We operate only as a selling agency for our growers. .... We 
get them [the members] the top price for their products. .... Do 
not consider social activities necessary. .... The aim of the asso- 
ciation is to provide a better market..... Our organization is de- 
signed to assist farmers in disposing of their product at a much in- 
creased price. .... We do not go farther with our members in the 
way of education than to aid them in selling and buying. 


Other reasons for the lack of locals are: ‘““Our members are 
scattered.”’ ‘‘The Farm Bureau and community center asso- 
ciations take care of social activities.” 

Certain interesting reasons for the formation of local 
groups are given. Considering the fourteen associations hay- 
ing only business activities among their local groups: One 
manager says that it is “good psychology” to get the mem- 
bers together for local meetings; the activities of these mem- 
bers consist of ‘“‘listening to the reports of the managers.” 
Other reasons are: 


We encourage this grouping because it gives us a closer contact 
with the members cf our organization. .... The reason the associa- 
tion has encouraged their development is based on the determination 
so to arrange our affairs that the growers will run their own business. 

. We can now more efficiently carry on our business. .... We 
don’t desire that our functions take the place of the existing social 
organizations. .... It is necessary to have local councils so that 
members can be in direct touch with the head office..... It gives 
the members confidence in the movement..... We find that we 
have some trouble in impressing upon our members the fact that 
each member is a part of the organization and has some duties to 
perform in carrying out the work of the organizations..... We 
believe that by having these members become interested in their 
local organization that they will soon realize they have a definite part 
in the activities of the association and that they will co-operate more 


1The probability is, of course, that there is a lower proportion of 
associations with functioning locals and with social activities among those 
associations which did not reply to the request for information, hence the 
data given for the fifty do not accurately portray the situation for the 
entire number, approximately one hundred. 


SOCIAL AND EDUCATIONAL WORK 39 


fully vie We stress education but not recreation in our local unit 
meetings. .... Due to the financial condition of the farmers of this 
country, we find they are in no mood for social activities. They are 
leaving the farms by hundreds and going to the cities. A man who is 
not even able to pay his taxes or interest is not in a mood to enjoy 
any organization efforts at social activities. Our local units were or- 
ganized for the purpose of discussing the business of their organiza- 
tion and for the purpose of aiding each other in better methods of 
cultivation, grading and the handling of their crops..... Farmers 
needed money more than picnics this year..... We hold many 
eerie the purposes of which are to give marketing information to 
members. 


Some of the ten associations conducting social activities 
report as follows: 
North Carolina Cotton Growers’ Cooperative Association: 


The purposes of our locals are as follows: Securing new mem- 
bers; encouraging cotton deliveries; providing a center for distribut- 
ing information from the headquarters office; gathering statistical 
data; keeping up the morale of the membership; social and rural com- 
munity development. 


This Association employs a worker to conduct local social 
activities among the members and their families. 
Burley Tobacco Growers’ Cooperative Association: 


The Burley plan contemplates the organization of locals, neigh- 
borhood groups of men and women coming together for the joint 
purpose of promoting the best interest of the cooperative marketing 
movement and participating in activities which will enrich and im- 
prove rural life. The necessary haste with which our cooperative 
has established itself demanded at first the concentration of all 
our forces on the immediate problem of building a sound business 
machine. We now turn our attention to what we consider to be the 
second step of fundamental importance in a cooperative, which is the 
development of a medium of contact between a central organization 
and the individual grower. .... The Burley local is a group of mem- 
bers—men, women and children—recognizing their common inter- 
est in the Cooperative Association and organized to assume a mem- 
ber’s part in it. The Burley local goes farther, however. School 
lunches, community buildings, good roads, parent-teacher associa- 
tions, libraries and health activities are among the things that have 
been fostered by the locals..... Of equal importance with the 
serious features of local activities are the social and recreational fea- 
Pures visas es These principles evolve themselves from our experience 
in local organization: First, that some medium of contact between 
the individual member and the Association is imperative; second, 


40 FARMERS’ CO-OPERATIVE MARKETING 


that women are fully as interested, fully as helpful and fully as nec- 
essary to its success as men; third, that the relation of the central 
organization to the local must be one of stimulation, careful guidance 
and continued assistance which in no way supplants local initiative 
and leadership; fourth, that there must be a definitely planned and 
accepted program; fifth, that a social purpose is of equal importance 
with the economic. 


This Association employs a trained social worker to conduct 
these local activities. 
Interstate Milk Producers’ Association, Philadelphia: 


We encourage the broadest kind of activities in connection with 
local meetings. We ‘‘tie-up”’ closely with the educational and social 
activities in our country communities. Fairs, picnics, rollics, etc., are 
held 


This Association helps to support a dairy council which pro- 
motes nutrition classes in large cities and smaller centers and 
has conducted significant public-health work among negro 
groups in cities. 

Oklahoma Cotton Growers’ Association: 


Our chief reason for organizing these local groups is to furnish 
a means for keeping our members correctly informed on the activi- 
ties of their marketing organization and on the principles of coopera- 
tive marketing. .... Our community local groups consider at their 
meetings various problems connected with the marketing of their 
cotton, principles of cooperative marketing, productive problems, 
raising standards of living, etc. These local groups also take up 
various local improvement movements, such as improving the local 
school, encouraging road building, and similar enterprises. Enter- 
tainment and social features are also strongly encouraged and these 
features have resulted in greatly increased attendance and interest. 


Tobacco Growers’ Cooperative Association (Virginia, 
North and South Carolina): 


The reason the Association has encouraged the development of 
the local groups is that the members may be fully informed as to the 
activities of the Association, and, by being so informed, offer intel- 
ligent guidance to those who are in charge of the affairs of the Asso- 
SHE The main activities of these groups are educational and 
social, 


This Association employs a trained woman to direct its edu- 
cational and social work. 


SOCIAL AND EDUCATIONAL WORK 41 


Connecticut Valley Tobacco Association: 


The purposes of local meetings are mainly educational and social. 
Various association and tobacco-growing problems are discussed. 


The New York Dairymen’s League Cooperative Associ- 
ation employs a woman to stimulate the interest of wives of 
members in the Association and in community work. 

The three state cotton associations in Texas, Tennessee, 
and Alabama are closely affiliated with the state farm bu- 
reaus, and the local organizations of the farm bureau promote 
social and educational activities. This appears to be a satis- 
factory arrangement. Describing the Texas arrangement, Mr. 
HK. C. Lindeman says: 

The Texas Farm Bureau and the commodity cooperative associa- 
tions maintain an intimate and reciprocal relation. Membership in 
the commodity association implies membership in the Farm Bureau, 
but the functions of the two organizations are kept separate. The 
Farm Bureau aids the cooperative associations and gives perma- 
nency to their educational programs, but it does not become a mark- 
eting association.! 


It thus appears that these “morale locals” are increasingly 
functioning within regional associations. They perform sever- 
al useful functions. They serve as centers for the distribution 
of information from the central associations to the individual 
farm, and are a vital link between the two. They engage in 
some social activities. They bring women into touch with the 
organization. They serve in enlisting new members. They 
build up organization morale and assist in maintaining loy- 
alty. They develop mutual acquaintance within the local 
community. Thus they make for organization stability and 
also for some social contributions to the community, even 
though their functions within the larger organization are 
strictly limited. 

The motives for the rapid organization of these groups 
within the regional associations are in most cases hard to 
determine. In many cases—perhaps a majority—the motive 
is business expediency. It is found necessary to get the offices 
of the central association into closer relations with the mem- 


1 Paper read before the American Sociological Society, December, 
1923 


42 FARMERS’ CO-OPERATIVE MARKETING 


bership, and this ‘‘contact local” is organized. Extensive 
contract-breaking is feared or begins, and this‘‘morale local” is 
set up to keep the association together. In some cases there is 
undoubtedly a desire among co-operative leaders to make a 
contribution to social welfare. 

These local groups and their programs are as yet too new 
and too much in a state of flux to be definitely appraised. 
They are, however, one of the spectacular phenomena within 
the movement. They are making some significant social 
contributions, and seem destined to play a big part in the 
movement if they continue to be organized and to function 
as they have done during the past year or two. 

Finally, it may be said that this social work is perhaps 
directly comparable to the better-known welfare work of in- 
dustry, in that the initiative for it comes from the central 
body, that the organization is by employed field workers, and 
that the motives frequently include business expediency as 
well as the intent to make a social contribution. 


CHAPTER VII 


RELATIONS OF SOCIAL, EDUCATIONAL, AND 
RELIGIOUS ORGANIZATIONS 
TO CO-OPERATIVES 


Inquiry was also made of the amount of assistance given 
by social, educational, and religious organizations and their 
leaders in the formation of farmers’ marketing organizations. 
Our investigation in this instance is confined to the amount of 
assistance given in the organization of the older type of locals 
for which data were secured. The regional associations have 
been formed mainly by expert organizers. Federations of 
locals have come about mainly through conferences of the 
managers of existing locals. But the older type of locals are 
in a real sense community organizations, and where these have 
been formed, there has been most opportunity for assistance 
in organization or opposition. 

Sixty, or slightly less than 6 per cent, of the managers 
of the 1,052 local associations studied by questionnaire say 
there was some co-operation from social, educational, or reli- 
gious leaders in the organization of their associations. Among 
the 617 associations conducting no social or educational 
activities of any kind, co-operation on the part of such leaders 
is mentioned in 3.3 per cent of the cases. Among the 435 asso- 
ciations which do carry on some social activities or contribute 
money to other organizations, assistance is mentioned in 8.9 
per cent of the cases. Dividing these latter organizations into 
groups on the basis of the main commodity handled, we find 
that assistance was given to one-seventh of the truck asso- 
clations; one-eighth of the dairy; one-ninth of the fruit; one- 
fifteenth of the live stock; one-twentieth of the grain; and one- 
sixth of all other associations. Presumably, where social or- 
ganizations or their leaders have assisted in the formation of a 
co-operative, there is more social emphasis in the activities. 

Considering these sixty cases in which assistance was 


43 


44 FARMERS’ CO-OPERATIVE MARKETING 


given: In one case, the Grange was instrumental in organizing 
the co-operative; in three cases, those giving assistance were 
also farm-owners; in nine cases, school teachers gave assis- 
tance; in fourteen cases, ministers; in fifteen, officers of the 
farm bureau; and in eighteen, co-operation came from two or 
more of the foregoing groups.! There are interesting examples 
of this kind of assistance in various communities. The man- 
ager of the Crystal Spring Cooperative Cheese Factory, 
Blountville, Tennessee, writes: ‘‘A minister organized us, 
built our factory with his own hands and has acted as secre- 
tary-treasurer.’”’ In Middleville, Michigan, a farmers’ club 
was organized some years ago by the Methodist minister. In 
this farmers’ club the organization of a co-operative creamery 
was discussed. The club decided to organize the co-operative, 
and the president of the club became the chief organizer. 
The farmers’ club carries on social and educational activities; 
the creamery, the manufacture and selling of butter. In the 
main, the men who are members of the creamery are also 
members of the farmers’ club. Of Ferris, Illinois, it is stated: 


The church has no close relation with the grain association but 
the larger part of our members come from the only church in the 
community. It is very evident, however, that most of the members 
active in the co-operative are also active in the church. 


1 Obviously this method gives only an approximate measure of the 
situation. For example, the farm bureau is in some sections not regarded 
as—and actually is not—a social organization. But the fact that assist- 
ance is mentioned in only 6 per cent of the cases certainly indicates that 
it could have occurred in only a small proportion of cases. 

In this connection, it is worth noting that a questionnaire to three 
hundred rural sociologists, economists, educators, and officers of co- 
operative organizations, asking for a summary of their observations of 
assistance to co-operatives in their state, brought the following results: 
132 replies were received from 30 states; of these, 58 had no information 
at all to offer; out of the 74 replying, 24 per cent said they had heard of 
no assistance from social, educational, or religious organizations or their 
leaders; 58 per cent said it was “little” or ‘negligible’; 14 per cent say 
it was “considerable” or “frequent”; and 4 per cent say in a majority of 
the cases. With regard to the opposition of these organizations to co- 
operatives: 53 per cent heard of none; 33 per cent heard of ‘‘little’’; 
4 per | cent of “considerable”; and 10 per cent “in a large number of 
cases.’ Those mentioning opposition chiefly mention small denomina- 
tional groups which have the reputation for non-co-operation in all 
social or economic movements. 


RELATIONS OF ORGANIZATIONS TO CO-OPERATIVES 45 


In Saline, Michigan, the people found through their parent- 
teachers organization that there existed a number of needs in 
the community which were not being met. They discussed 
these needs, and they sought to find ways and means of meet- 
ing them. They now have a live-stock shipping association 
and a co-operative grain elevator (also a chautauqua and a ly- 
ceum). From Novato, California, the pastor of the Presby- 
terian church writes: “It would not be fair to say that the 
co-operative economic organizations are the product of the 
church work but the church has constantly fostered these 
movements.”’ Of Orange Township, Iowa, an observer writes: 
‘“‘A strong country church and a strong consolidated school 
have had much to do with the formation of a strong co-oper- 
ative egg-marketing association.’? Another observer writes: 
“T found examples in Minnesota and North Dakota where a 
Catholic priest had gotten his people interested in a co-oper- 
ative enterprise.” 

Out of the thirty-three organizations in the Middle West 
studied intensively, six have close affiliations with the farm 
bureau and were organized among farm bureau members; 
in two other cases friendly help was given by educators and 
ministers, and in one of these, ministers were particularly 
active in making speeches for the co-operative. A canvass of 
the denominational connections of the officers and directors 
of these co-operatives reveals that men of all denominations 
may be found working together in a co-operative. One organi- 
zation has on its board of directors men from the following 
denominations: 2 Congregational, 2 Roman Catholic, 2 Lu- 
theran, 1 Presbyterian; another, 2 Methodist Episcopal, 2 Ro- 
man Catholic, 2 Presbyterian; another,3 Methodist Episcopal, 
1 Disciples, 2 Presbyterian; another, 2 Baptist, 2 Methodist 
Episcopal. Church connections or lack of church connections 
do not seem to be a factor in co-operative organization, except 
in isolated instances. 

Dr. J. H. Kolb, of the Wisconsin College of Agriculture, 
reports the following results from a questionnaire on ‘‘Com- 
munity Factors in Agricultural Co-operation’ sent to leaders 
of agricultural co-operation: 


46 FARMERS’ CO-OPERATIVE MARKETING 


A total of fifty-five replies were received from leaders in fourteen 
states. Not all the questions were applicable to local conditions, so 
that some questions frequently had to be left unanswered, but in 
each case the majority is large enough to show substantially the 
trend of opinion. It is realized that no conclusive results can be ob- 
tained by so general a study of such a complicated subject. A num- 
ber of circumstances affect all of the conditions covered in the in- 
quiry, while both circumstances and conditions are variable and 
elusive. The inquiry serves, however, to bring out clearly the judg- 
ment of leaders in co-operation on these points: 

“Should a co-operative enterprise include the membership of 
several churches?” No negative replies. A few feared some possi- 
bilities of dissensions but all say the membership should be recruited 
from several churches, some on account of the need for the volume of 
business, others because they think religious lines should be ignored 
in co-operative enterprise. 

‘“‘Does the presence of more than one denomination in a com- 
munity help or hinder co-operation?” Hinder—24, help—5. Some 
stated that if people could tolerate the other man’s religious beliefs 
they were more likely to succeed in co-operation. None regarded 
this as commonly a serious hindrance to co-operation. 

“Does a strong unit of the Farm Bureau, Farmers’ Union, equity 
or other farmers’ organization render a community more responsive 
to co-operation?’”? Yes—50, no—4. One objector stated that too 
many organizations in a community were likely to wreck a co- 
operative organization through jealousies. 


Opposition to co-operative marketing on the part of social 
organizations seems to have occurred much less frequently 
than assistance. Slightly less than 1 per cent of the managers 
of the 1,052 associations state that opposition occurred. One 
manager, writing from a town office of his organization, states 
that the ministers and teachers in his town are dominated by 
commercial interests, and are generally opposed to the farm- 
ers’ co-operative. Others write: 

They were all opposed at first because they thought our organ- 
ization was a part of a big farmers’ trust..... Ministers and teach- 
ers are capitalistic. .... Teachers and ministers are generally in- 
different. .... Some were opposed and said it couldn’t be done. 

. . [They were not consulted nor considered of any value..... 
They were apathetic and still are..... One minister told us we 
could not belong to both the co-operative and his church. 

Obviously the data in this chapter are inadequate for any- 
thing but a tentative and incomplete analysis of this question. 
It seems fair to conclude, however, that some co-operatives do 


RELATIONS OF ORGANIZATIONS TO CO-OPERATIVES 47 


receive noteworthy assistance from social organizations, but 
if we are to take the answers of the 1,052 managers of local 
associations as giving an approximate measure of the situa- 
tion, we must conclude that the instances quoted above are 
not of great significance in the development of co-operative 
marketing. 

The matter is perhaps adequately summed up by one 
observer who writes: ‘“‘Co-operative marketing does not come 
as a result of the influence of schools or churches, but usually 
out of the economic needs of the community directly.’’ An- 
other, who has been for over a decade a careful student of 
rural communities in all parts of the country, puts it thus: “T 
am impressed by the fact that farmers carry their economic 
and their social and idealistic interests in different ‘pockets.’ 
Co-operation has been initiated as a new movement by inter- 
ested individuals under the impulse of economic propaganda 
rather than by existing organizations.’”’ There are certain 
other reasons for this state of affairs: The leaders of non- 
economic organizations are uninformed about co-operative 
marketing. They have sometimes maintained aloofness be- 
cause of the conflict between organized farmers and business 
men. This conflict has undoubtedly made many professional 
men and women, especially those in the villages and towns, 
take a neutral attitude. 

Both social organizations and co-operative economic asso- 
ciations probably “go their own way” in most rural communi- 
ties, and in any case there are no data to support the claim 
that the presence of strong social, educational, or religious 
organizations has been of material assistance in organizing 
co-operative marketing. That assistance depends solely upon 
the attitude of the leaders of these organizations. Outstand- 
ing assistance has evidently been given in a small proportion 
of communities where leaders were informed and willing to 
help. Again, the fact that co-operative marketing is usually 
born of economic necessity and that whirlwind campaigns 
involving whole states have been put on rather disposes of 
the idea that there may be something peculiar about some 
communities that makes them more responsive to co-opera- 
tion than others. 


CHAPTER VIII 
CONCLUSIONS 


On the basis of the foregoing data, it seems fair to con- 
clude that: 

1. The great majority of co-operative marketing associ- 
ations among farmers are organizations which are not pur- 
suing social (non-commercial) objectives. The absence of 
social activities is due mainly to the view prevailing among 
members and managers that their associations are economic 
organizations only, and to the fact that social development is in 
many instances in charge of separate community organiza- 
tions. Considering social results, these business-only co-opera- 
tives probably differ little from the ordinary business corpo- 
rations. 

2. Significant social activities and education in co-oper- 
ative principles and methods are carried on by but a small pro- 
portion of local associations. 

3. In some cases, the large regional associations have 
created informal or advisory local groups which engage in 
varied social activities. Four of these associations employ 
women workers to promote social or community work among 
the families of the members. The social work of these associ- 
ations is more widespread and significant than that of any 
other rural co-operatives. 

4, Federations develop with established local associations 
as foundations, and thus in the beginning recognize varied 
local interests of members, but only one federation has pro- 
moted important social activities. 

5. Social, educational, and religious organizations and 
their leaders have been on the whole unconcerned about: the 
development of farmers’ co-operative-marketing associations. 

If there are to be more social results from co-operative 
marketing, it is suggested that: 

1) Co-operative relationships should be established be- 


48 


CONCLUSIONS 49 


tween social, educational, and religious organizations and the 
marketing enterprises. This is a difficult matter. There is 
little technique or experience in developing this kind of co- 
operative relationship in such a way as to achieve any worth- 
while results. But if social development is to be furthered by 
co-operative economic organizations, social organizations and 
their leaders dare not ignore the task of friendly assistance, 
as they have ignored it in the past. The Texas plan, whereby 
a member of the Farm Bureau also holds membership in a 
marketing association, seems to offer suggestions in some 
cases. In other cases, there should probably not be such close 
relationships. 

2) There should be considerably more education in co- 
operative principles and methods within the co-operative 
movement than has hitherto been in evidence. Local associ- 
ations of all kinds should be developed into discussion groups 
as far as possible. Reserve funds for education should be 
maintained by local and federated or centralized organi- 
zations. Carefully written pamphlets should be widely circu- 
lated in large numbers. The local meetings within the Burley 
Tobacco Growers’ Association and the New York Dairymen’s 
League, the Institute of Cooperation now being developed, 
are all significant steps. Co-operatives may also well agitate 
for a fair presentation of their organizations in school and 
college textbooks. 

3) Of great promise is the following suggestion from 
Wallaces’ Farmer (Editorial, February 29, 1924) for local 
associations formed with capital stock: 

One difficulty that the cooperatives always face is the fact that 
so many patrons want all profits turned back to them at once in the 
shape of patronage dividends. Neglect to build up a reserve in good 
times has been the cause of a number of failures in the cooperative 
field in the last few years; and in many cooperatives, even where 
complete failure has been avoided, successful operation has been 
made much more difficult by the absence of adequate reserves. Our 
local cooperatives now seem to be working back into a profit-making 
period. The members ought to remember the lessons of the last few 
years, and see that adequate capital is provided and a good reserve 
fund built up, before they make any demands for patronage divi- 


dends. 
Cooperatives in other countries have gone farther than this. 


50 FARMERS’ CO-OPERATIVE MARKETING 


They have used their savings to further the social progress of the 
community. The dividends have gone into recreation grounds, lib- 
raries, theaters, community buildings and educational work of all 
SOFS-\ heen 

We suggest, therefore, that it will pay members of farmers’ 
cooperatives not to be in too much of a hurry in demanding patron- 
age dividends. Dividends converted into added capital increase the 
efficiency of the cooperative, and so increase the return to the mem- 
bers. Dividends put into social and educational enterprises pay good 
returns in the increased social welfare of the community..... 


A start might be made by contributing money for the 
beautification of school grounds, for the purchase of new 
school equipment, for playground apparatus, for bringing in 
lecturers and entertainers; by giving regular support to pub- 
lic-health and welfare work, such as that of a school or com- 
munity nurse; also by supporting such existing institutions as 
meet the approval of a large majority of the members. It is 
recognized that a comprehensive social program cannot be 
financed by a local co-operative, but the co-operative may 
easily stimulate worth-while enterprises. 

4) Farmers’ co-operative marketing associations should 
engage directly in social activities—recreation, public health, 
child welfare, adult education, etc.—only when these are 
deemed inadequately organized by other agencies in the com- 
munity. There may be cases where a co-operative should do 
much more. It is possible that our American co-operatives 
should eventually do more direct work of this kind. But with 
health, welfare, and recreation activities under the auspices of 
competent voluntary and public agencies, there is great dan- 
ger that co-operatives may compete with or come into conflict 
with established agencies if they venture into this work. As a 
first step, marketing associations can perhaps do no better 
than to maintain co-operative relationships with existing 
social organizations. 

5) Certain other suggestions looking toward further so- 
clalization of the co-operative movement but outside of the 
field of this particular investigation might be made, as follows: 

a) Farm women may well be brought into closer touch 
with co-operative organizations. The steps being taken by 
the New York Dairymen’s League, the Burley Tobacco Grow- 


CONCLUSIONS 51 


ers’ Cooperative Association, the Oklahoma Cotton Growers’ 
Association, and other organizations are very significant. Par- 
ticipation by women in the movement will bring the view of 
the consumer in the farm home to bear on policies, and serve 
to link the entire family with the association. 

b) There might be more contacts and conferences between 
leaders of producers’ and consumers’ organizations. The un- 
fortunate relationships between these two types of organi- 
zations were mentioned in the first chapter. One of the com- 
mon aims in the elaborate scheme of consumers’ co-operation 
is that the consumers’ society shall seek to control the produc- 
tion of the supplies which it handles. Such a purpose, of 
course, is viewed with great alarm by some leaders of large 
farmers’ organizations who contend that organizations of pro- 
ducers should have bargaining power and a considerable 
measure of control over the sale of products. There will thus 
be real conflict between consumers’ and producers’ organi- 
zations in this country if both continue to develop and if co- 
operative relations are not created between urban and rural 
organizations. That it is possible for organized producers and 
consumers to co-operate closely is illustrated by the experi- 
ence of the Finnish organizations, by instances in some Euro- 
pean towns where farmers and industrial workers are mem- 
bers of the same co-operative consumers’ organization, and by 
the experience of a few organizations in the United States, 
for example, the Cooperative Trading Company of Wauke- 
gan, Illinois. 

c) Leaders of farmers’ co-operatives in the United States 
might well take the lead in establishing close relationships 
with co-operatives in other countries. In most countries co- 
operation is as yet nationalistic. There is every evidence that 
farmers’ co-operatives in the United States have seldom 
looked beyond their national boundaries—except when they 
had a surplus to sell! Overcoming nationalistic competitions 
and antagonisms and the establishment of international co- 
operative trade are two of the important problems for the 
co-operators of the world to solve. May the rural associations 
in the United States make a contribution to their solution! 

One could dismiss the whole matter by trusting that 


52 FARMERS’ CO-OPERATIVE MARKETING 


social results will come through the development of business- 
only organizations, which will increase rural prosperity and 
make available more money for social development. Ap- 
parently there is ‘‘pretty high correlation” between economic 
prosperity and social development in certain parts of Cali- 
fornia, for instance, but there are good reasons why such a 
conclusion is unsatisfactory. First, it appears to some econo- 
mists that when one considers average conditions over a pe- 
riod of years, and when one takes into account all farm pro- 
ducts, co-operative marketing will not and cannot of itself 
make universal the prosperity that one finds in a few favored 
sections of the world. Second, the attainment of a great 
amount of economic prosperity by business men has not re- 
sulted in social vision among them except by a small propor- 
tion, and “‘prosperous city business” is in the main a sterile 
field for social development. It is therefore dangerous to ex- 
pect an organization which gives 100 per cent of its activity 
to money-getting activities, with leaders who have at best 
only a vague enthusiasm about “higher standards of living”’ 
or about “helping the wife and kiddies,” to bring about social 
results. Third, it appears from the European experiences 
(some of which are quoted in the Appendix) that intensive co- 
operative economic action has in some instances produced 
such significant results in the development of individual re- 
sponsibility for participation in group life that one must turn 
to this phase of co-operation with most confidence in expect- 
ing social results. 


APPENDIX 


STUDIES OF THE SOCIAL ASPECTS OF EUROPEAN 
AGRICULTURAL CO-OPERATIVES 


THE GILL REPORT OF 1912 


The social implications of agricultural co-operatives in 
Europe were studied in 1912 by C. O. Gill, of the Federal 
Council of Churches, who was a member of the American 
Commission for the Study of Agricultural Cooperation in 
Europe. Mr. Gill spent six months visiting twelve countries. 
In his personal report to the Council on conclusion of his mis- 
sion, he states: 


In many cooperative societies clergymen have played an impor- 
tant part. This was particularly true in the beginning when help was 
most needed. In Belgium, the clergy have taught technical agri- 
culture and promoted banks and societies for purchase, production 
and sale. In Ireland, Germany, Austria, Belgium, Holland, Italy, 
Hungary, France, Russia and the Balkans, the clergy have been most 
active. Most of the activity has been among Roman Catholic priests 
but in Germany, Austria and Hungary, the Protestant ministers are 
active in giving instructions and advice on the advantages of co- 
operation. Clergy of all denominations have helped Raiffeisen banks. 
Large numbers of Protestant clergy are found as chairmen or secre- 
taries of their committees of management and boards of supervision. 
A well known authority states that in many of the district councils 
of the Raiffeisen Union, Protestant clergymen form a majority of 
the members, or as in Pomerania, Saxony and Thuringen, hold office 
in the local credit societies. Twenty out of twenty-two directors of 
the district of Cassel were clergymen. 


As to direct and indirect social effects of these agricultural 
co-operatives: 


The rapid expansion und magnitude of these organizations is 
not more impressive than their social effects... . . Admittedly large 
numbers of cooperators think chiefly of the reduced cost of their pur- 
chases, of the higher prices they have received for their products or of 
other material benefits, but for large groups of others cooperation has 
a different purpose. 


53 


54 FARMERS’ CO-OPERATIVE MARKETING 


Not all communities have been affected by social results of 
co-operatives, but 


it is none the less true that in this economic movement the applica- 
tion to business of certain ethical principles of a high character has 
produced a variety of other good results which are well worth con- 
sideration. 


In numerous instances, 


cooperation has emancipated the poor farmer from the usurer. By 
capitalizing the common honesty of the poor farmer, cooperation has 
secured lowest rates of interest. The farmer then works for his own 
support instead of that of a large number of distributors who consti- 
tuted an enormous burden upon his shoulders. Cooperation enables 
the small farmer to have the same advantages in selling as the 
large farmer. He gets the same price for the same quality. 


Raiffeisen banks in Germany supported infant and con- 
tinuation schools. They furnished schools with maps, musical 
instruments, etc. They made grants to village libraries, or- 
ganized circles for reading and acting, and established clubs 
for adults and juveniles. They conducted village institutes, 
built meeting halls, and established children’s savings banks, 
telephone services, and arbitration courts. They organized 
gymnastic societies, local nursing centers, infant-aid associ- 
ations, and anti-tuberculosis leagues, and engaged in other 
work of great variety. 

Co-operation has had a most marked effect on the promotion of 
Lanta Gamer ogee In Austria and Hungary, the priests support the co- 
operative movement because members spend their evenings in the 
co-operative society rooms instead of in the public house. .... Co- 
operatives are promoters of business integrity. They are promoters 
of democracy. That the democratic principle is the basis of success 
in agricultural co-operation is proved by the fact that attempts of 
farmers to combine on other principles almost invariably have failed. 

Co-operation is a great developer of responsibility among 
individuals Ade WRN Illiterate men are taught to read. Neighbors who 
were enemies become friends. Many men make great sacrifices for 
the co-operative movement. 

Some leaders think of co-operation as a sort of social reform and 
in some cases almost areligion..... Many agricultural societies im- 
pressed the investigator as Christian institutions quite as much as 
did the churches in that country. Some organizers are promoting 
the Christian ministry. The model by-laws and constitution of an 
association under the Raiffeisen system declare the object of the 


STUDIES OF SOCIAL ASPECTS 5d 


institution is the promotion of Christianity. Raiffeisen himself held 
that conception. 


More recent and detailed analyses of the situations in vari- 
ous countries are available. Let us consider briefly the rural 
co-operative movements in Poland, Russia, Finland, Ireland, 
and Denmark. 


POLISH SOCIAL AND ECONOMIC CO-OPERATIVES 


In The Polish Peasant, by Thomas and Znaniecki, is found 
the following information in regard to the Polish local co- 
operative associations: 


Every cooperative institution emphatically pursues a social aim. 
The main slogan of the cooperative movement is the harmony of 
social and individual interests. .... 

Every one of these institutions—commune or agricultural circle, 
loan and savings bank or theater—is not merely a mechanism for the 
management of certain values, but also an association of people, each 
member of which is supposed to participate in the common activities 
as a living, concrete individual. Whatever is the predominant, offi- 
cial, common interest upon which the institution is founded, the 
association as a concrete group of human personalities unofficially 
involves many other interests; the social activities between the mem- 
bers are not limited to their common pursuit, though the latter, of 
course, constitutes the main reason for which the association is 
formed and the most permanent bond which holds it together. 

The cooperative method [of organization] forms in this respect 
an interesting contrast to the coercive method; by starting with indi- 
vidualism it develops a positive interest in fostering social welfare 
and progress, whereas the legal system which starts with absolute 
social control and which the individual is forced to accept produces 
only, at the best, a negative interest in not hindering social welfare 
and progress. 

We see that cooperation by the very fact that it is based on free 
individual association for common aims allows for institutional ex- 
pression of every individual attitude as far as the latter involves a 
need for certain positive values that can be obtained by planful com- 
mon activity. On the other hand, the rational character of coopera- 
tive institutions makes a mutual adjustment of their aims possible, so 
that, instead of interfering, their activities supplement one another. 

However limited and imperfect may have been up to the present 
the application of the cooperative ideal, this ideal is eminently cap- 
able of becoming the leading principle of a social order.! 


1Qp. cit. (4 vols.), pp. 300-305. Boston: Richard C. Badger, 1920. 


56 FARMERS’ CO-OPERATIVE MARKETING 


“NON-TRADE”’? ACTIVITIES OF THE RUSSIAN ORGANIZATIONS 


Eugene M. Kayden, an economist of the United States 
Department of Agriculture, writes thus of the Russian co- 
operative movement, including the rural organizations: 


The Russian exponents of cooperation, both in theory and prac- - 
tice, have not limited cooperation to matters of profitable supply and 
marketing, but have ever thought of cooperation in terms of greater 
economic and social development and the enhancement of efficiency 
and power of adjustment to changing conditions. Cooperation in 
Russia has always considered itself as being essentially a form of 
economic organization which has emerged in the slow evolution of 
industrial society coming to achieve, through the agency of con- 
certed action inspired by the spirit of social service, what profit- 
seeking commercialism was alleged to have failed to achieve. Co- 
operation was to make the flow of goods to market orderly and eco- 
nomical, and so effect savings to all alike; it was to render the busi- 
ness of farming more scientific and productive; and it was also to 
restore the economic initiative of the local communities, gradually 
drawing them together for wide action into district, regional and 
national federations directed and controlled by organized democra- 
cies of producers and consumers. Cooperation was education, and 
complementing the trading activities of the federation were the non- 
trading interests embracing special research, popular instruction, 
legal advice, extension service, field exhibitions and a variety of other 
activities serving to raise the level of intelligence and citizenship in 
the masses and to train leadership in the ranks.! 


In the issue of Agricultural Cooperation for June 4, 1923, 
is a further statement on the Russian organization: 


The basic unit of cooperative organization in Russia, whether it 
be in the field of marketing, supply, credit, production, is the local 
or primary society. Locals are generally organized into district 
unions varying in size, combined in their turn in provincial unions. 

. Each [provincial] union has a trade department, divided into a 
number of commodity divisions according to the requirements of its 
business and territory and a non-trade department concerned with 
problems of organization, propaganda, education, research, publica- 
tion, legal aid, etc. The dual functions of Russian cooperation— 
trade and non-trade—are its distinguishing traits; in most countries, 
functions other than business are reserved to special federations.? 


1 Agricultural Cooperation, January 15, 1923, pp. 2 and 3. 


? See, e.g., Elsie Terry Blanc, The Cooperative Movement in Russia, 
chap. ix, “Educational Significance of the Russian Cooperative Move- 
ment.” New York: Macmillan Co., 1924. 


STUDIES OF SOCIAL ASPECTS 57 


In Russia the participation of women in co-operative or- 
ganizations, even in management, is a distinguishing feature: 


Russian peasant and working women have for a long time shown 
an interest in the cooperative movement, in both producers’ and 
consumers’ organizations. .... With regard to the participation of 
women in cooperative management, it is estimated that in thirty- 
seven provinces there are about five hundred peasant and working 
women serving on local management boards and committees in 
various cooperative organizations. For the purpose of inducing wom- 
en to take a more active part in the movement the cooperative 
unions [or federations of local societies] have introduced what is 
known as the “‘probational system” by which, after a period of prac- 
tical service in the local society, women are allowed to take up a 
course of special training to fit themselves to work on boards and 
committees. The latest reports show that in thirty-nine provincial 
cooperative unions the present number of women receiving special 
instruction is two hundred and twenty-seven, but the figures are 
incomplete.! 


In the Russian movement the agricultural societies are 
organized by commodities, and each commodity division or 
federation is a member of the Selskosoyus, the national agri- 
cultural federation. The Selskosoyus is then merged in the 
Centrosoyus, which includes also the national federations of 
consumers’ and industrial societies. Russian co-operation is 
thus marked by a high degree of co-ordination and unity, with 
the preservation of a maximum of local autonomy and initi- 
ative. 


BUILDING ‘‘DUAL-PURPOSE’”’ CO-OPERATIVES ON 
EDUCATION IN FINLAND 


Henry Goddard Leach, who is known as a careful student 
of the Scandinavian countries, writes the following after a 
study of the co-operative movement in Finland: 


If I were asked what vital factor has held the people... . to- 
gether through all the political turmoil of the last twenty years, 
writhing first under the grim heel of a czarism determined to crush 
their nationality, escaping from this only to be cast into the mael- 
strom of a succession of most cruel civil and social wars, I should 
reply, without hesitation—the cooperatives. The cooperative move- 
ment in Finland is the outcome of one harmonious scheme. 

In Finland the cooperative societies are only twenty-three years 


1 Agricultural Cooperation, May 21, 1923, p. 11. 


58 _ FARMERS’ CO-OPERATIVE MARKETING 


old. The Finns had thus the advantage of seeing what other coun- 
tries had done. The cooperative dairy had already brought a new 
age of prosperity to little Denmark. The Raiffeisen banks had per- 
meated Germany. Cooperative stores were flourishing in the indus- 
trial cities of England. In Finland, meanwhile, the doctrines of co- 
operation had been crystallizing in one mind, eagerly bent upon ap- 
plying them to the needs of his own countrymen and helping them in 
their struggle up into the light. That man was an idealist, Hannes 
Gebhard, professor of economics in the University of Helsingfors, 
called today “the father of Finnish cooperation.” 

Professor Gebhard did not begin his experiment by practical 
demonstration. He first conceived a program of education to prepare 
the people to do business in the new way. In 1899 this program was 
launched through the establishment of a society of agitation, called 
“Pellervo,” named from “the sower,”’ a character in the Finnish epic, 
Kalevala; Professor Gebhard became president of the society and 
remained the editor of its publications for twenty years. 

Pellervo sent lecturers into the field and pubhshed a magazine 
devoted to cooperation, the Pellervo Journal. This periodical is 
issued in both the languages of the country, the Finnish edition twice 
and the Swedish edition once a month, and has attained to the largest 
circulation among agricultural journals in all Northern Europe. The 
editors and the consulting staff have given unflagging expert advice 
in the formation of all sorts of cooperative organizations and assisted 
in drawing up their rules and methods of bookkeeping. Pellervo is 
the idealistic connecting link between the many forms of cooperative 
endeavor in Finland. 

The acceptance of the principles of cooperation in all its branches 
has been phenomenal. Fifteen per cent of the entire population have 
joined the cooperative stores; of the total stock of cows about 21 
per cent have been registered with a cooperative dairy, and of all the 
farmers about 13 per cent have joined a rural bank. In Finland 
today there are upward of 3,120 registered cooperative societies, of 
which 737 are stores, 494 dairies, and 713 banks—together more than 
half the total. 


Another student of co-operation in Scandinavia, Chris 
L. Christensen, in charge of the Division of Agricultural Co- 
operation in the United States Department of Agriculture, 
reports that ‘“‘Finland’s societies are largely of the ‘dual pur- 
pose types,’ 1.e., that they are formed for the purpose of carry- 
ing on business and social activities.’ 


1 Survey, February, 1922, p. 669. 
2 In an interview with the author. 


STUDIES OF SOCIAL ASPECTS 59 


THE IRISH MOVEMENT 


The genius of the Irish agricultural movement, Sir Horace 
Plunkett, is authority for the statement that it was 


promoted by a small group of social workers for the first five years. 

Our first dairying society was started in the spring of 1891, after 
I had addressed fifty, and my associates many more, abortive meet- 
ings. By the year 1899, however, we had 152 of these societies work- 
ing, with a trade turnover of about $2,500,000 worth of butter. 

We had now [in the co-operative movement] the means of im- 
proving both the technical and the business methods of our farmers. 
For a complete policy of rural progress, it was equally necessary that 
we should interest ourselves in the brightening of rural life on its 
social and intellectual side. The pioneers of the movement were 
more interested in this part of the work than in any other. Societies 
were encouraged to use their business organizations for social gather- 
ings. Village halls were built. In all this we were largely following 
the example of the granges of the United States and the women’s 
institutes of Canada. The point is that we were at work upon a 
threefold scheme—a policy of rural reconstruction which came to 
be expressed in the Irish formula, “Better Farming, Better Business, 
Better Living.” 

If I were asked what special contribution Ireland has made to 
the rural problem, I would certainly say that it consists in defining 
the proper relations between its three parts in all endeavors to deal 
with the problem comprehensively. In our view agriculture must be 
regarded as an industry, as a business, and as a life. To the aid of 
the industry must be brought the teaching of all the physical sciences 
relating to the soil, climate, plant and animal life—to the buildings 
and mechanical equipment of the farm—and so forth. To the busi- 
ness of the farm must be applied sound economic principles and 
those modern methods upon which all business undertakings nowa- 
days depend for their commercial success. Here the essential thing 
is that farmers should be taught to combine, not only in order to hold 
their own in their dealings with government and with commercial 
and industrial interests, but also in order that the small cultivator 
may have the economic advantages of the large farmer. 

In short, we have learned in Ireland, and would impress upon 
all rural communities which have become backward owing to the 
concentration of all that is best in thought and feeling for public wel- 
fare upon the problem of the cities: first, the vital need of thorough 
organization upon cooperative lines; second, the paramount impor- - 
tance of reliance upon voluntary effort rather than upon state assist- 
ance, in the sure belief that what by intelligent combination we ° 
can do for ourselves is immeasurably more beneficial than what the 
best of governments can do for us; third, the insistence upon build- 


60 FARMERS’ CO-OPERATIVE MARKETING 


ing up rural society on its three sides; namely, the technical side, 
the commercial or business side and the social and intellectual side. 


INDIRECT SOCIAL EFFECTS OF CO-OPERATIVES IN DENMARK 


The Danish farmers have probably built up the most 
efficient co-operative marketing associations in the world. 
About 1880 a change of type of farming became an urgent 
necessity for the Danes. A flood of cheap grain came to the 
European market from the United States and the Argentine. 
The Danish farmers were forced by this competition to derive 
their chief income from animal products. They bought up 
cheap grain offered by the New World, fed it to the animals, 
organized co-operative societies by separate commodities to 
handle butter, eggs, and bacon, and federated these societies 
into powerful marketing agencies which sell high-quality 
products particularly in England, in large continental cities, 
and now, in small quantities, in the United States, Consider- 
ing social implications, several matters concern us here. First, 
co-operative development in Denmark has been considerably 
assisted by educational leaders. There it has been taught and 
discussed in the schools. Its beginnings were in well-devel- 
oped local groups, which were held together by loyalty, edu- 
cation, public opinion, and social pressure as well as by mem- 
bership contracts. Second, there has been a marked develop- 
ment of popular education and community organization side 
by side with that of the co-operatives. The Danish folk 
schools and the adult high schools have made great contri- 
butions to the development of the excellent rural culture 
which is found by all the students who visit the country. 
Third, the co-operatives themselves are strictly business or- 
ganizations and do not engage directly in social activities. 
Fourth, therefore, the social results of co-operatives in Den- 
mark must be largely classed as indirect. These indirect social 
results are very great, however, according to the students of 
Denmark’s development. The conclusions of Chris L. Chris- 
tensen, who spent over a year and a half in Denmark and 


1 Survey, December, 1921, pp. 317-25. 


STUDIES OF SOCIAL ASPECTS 61 


reached all parts of the country, will probably be generally 
supported by other students. He writes: 


Cooperation has lifted the Danish farmer from the level of 
peasantry to the high plane of an enlightened and wholesome coun- 
try life. It has made Denmark one of the most prosperous nations 
in the world for its size. It has done a great deal more: it has made 
the Danish farmer a contented, well-educated, and self-respecting 
citizen, and the Danish farm home life is comfortable and altogether 
charming..... 

Forty years ago farm women in Denmark did men’s work in the 
fields, just as I recently saw women doing in other European coun- 
tries. Today it is very unusual for a Danish woman to do any field 
work. I seldom even saw one of them milking cows, a job that a 
few years ago was done mostly by the women and girls..... 

Ninety per cent of the farmers are members of county agricul- 
tural societies through which they hire, partly with their own funds, 
educational and technical experts who correspond to our county 
agents. The Government bears half of the expenses. Some of these 
county societies employ several specialists—dairy, farm cost ac- 
counting, poultry, crops, or even a horse specialist. 

Within this society are local community clubs. The community 
house is a prominent feature of rural Denmark, and adds more 
pleasure and culture to farm life. In summer, neighborhood picnics 
at parks or at the beaches are frequent. I was amazed at the serious 
attention given to the speakers at these gatherings. A real authority 
would be engaged for the occasion to discuss some phase of agricul- 
ture, politics, music, art, literature, or some other subject. He would 
be heard attentively for an hour and a half. Then, after a recess for 
rest or refreshment, the crowd would often spend another hour or 
more asking questions and discussing his statements with freedom 
and intelligence. 

The community club has such lectures throughout the year, 
meeting the expense by a membership fee, or an extra charge if 
necessary. Plays are frequently given at the clubs, either by local 
talent or by professional companies from the city. Danish farm folk 
are tremendously interested in music. Group singing is a regular 
feature of their neighborhood gatherings. Music and art are regular 
subjects in the schools. Denmark, by the way, has special adult 
schools, intended especially for young men and women of nineteen to 
twenty-three and twenty-four who have served a farm apprentice- 
ship for two or three years and wish to prepare for homes of their 
own. English is taught in some of the schools. Books in English 
could be found in most of the homes I visited. Translations of Ameri- 
can books were common. I noted that Jack London is a Danish 
favorite. 


62 FARMERS’ CO-OPERATIVE MARKETING 


Education is almost a passion with the Danes. At the fairs I saw 
no midway with its blare and side shows. All attention was focused 
on the exhibits, where cooperative bull associations vied with each 
other for championships, farm products competed for excellence, and 
talks by experts were given. It was especially interesting to note 
that their experiment farms were always to be found right alongside 
the fair grounds, where at fair time throngs studied the results of the 
year’s experiments. How different from the isolated experiment sta- 
tions in this country! 

Cooperation has to a large extent ironed out class and social 
distinctions. In the cooperative societies the count from the large 
estate, the middle-class farmer, and the peasant’s grandson meet on 
equal ground to discuss their common business problems, learning to 
appreciate and enjoy each other. I observed that this prevailed 
among the women folks as well. .... 

I can say with certainty that .... it is the collective effort of 
the Danish farmers expressed in the cooperative form of organiza- 
tion through which they have found the route to prosperity, and 
have discovered the way to enjoy happier and more comfortable 
homes, and to live more interesting lives. Cooperation has not only 
helped the Danish farmers to better their agricultural production and 
marketing, but it has also carried with it a powerful educational and 
social development in the rural home and community life. The co- 
operative creamery, the cooperative bacon factory, the cooperative 
poultry and egg marketing association, have made it possible for 
the women to give up their hardest work, and for their families to 
uoye gh as charming and rich a home life as you can see any- 
Where. .... : 


1 Farm and Fireside, October, 1923, pp. 20, 60, 61. 


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Bulletins Issued 


THE WAGE QUESTION 
FEBRUARY, 1922 


THE COAL CONTROVERSY 
May, 1922 


THE TWELVE HOUR DAY IN 
THE STEEL INDUSTRY 
JUNE, 1923 


SOCIAL ASPECTS OF FARMERS’ 
CO-OPERATIVE MARKETING 
APRIL, 1925 : 





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